Chapter 4 Flashcards
1
Q
Utility Function
A
A way of assigning a number to every possible bundle so that more preferred bundles are assigned higher numbers than less preferred ones
2
Q
Ordinal Utility
A
Where bundles are ranked in order of magnitude but the difference in magnitude means nothing
3
Q
Monotonic Transformation
A
A utility function that represents the same preferences as the original utility function
4
Q
Cardinal Utility
A
A theory where the size of the utility difference between two bundles matters.
5
Q
Level Set
A
The set of all (x1,x2) such that u(x1,x2) equals a constant
6
Q
Quasilinear Utility
A
Partly Linear Utility
7
Q
Marginal Utility
A
The rate of change of utility with respect to good 1
