Chapter 5 - Consumer Choice Flashcards
Demand
The willingness and ability ti buy specific quantities of a good at alternative prices in a given time period, ceteris paribus.
Determinants of Demand
Tastes (desire for this and other goods)
Income (for the consumer)
Expectations (for income, prices, tastes)
Other goods (their availability and prices)
Utility
The pleasure for satisfaction obtained from a good or service.
Total Utility
The amount of satisfaction obtained from entire consumption of a product.
Marginal Utility
The change in total utility obtained by consuming one additional (marginal) unit of a good or service.
Ceteris Paribis
The assumption of nothing else changing
Law of Demand
The quantity of a good demanded in a given time period increases as its price falls, ceteris paribus.
Demand Curve
A curve describing the quantities of a good a consumer is willing and able to buy at alternative prices in a given period, ceteris paribus .
Market Demand
The total quantities of a good or service people are willing and able to buy at alternative prices in a given time period; the sum of individual demands.
Consumption Surplus
The difference between the maximum prices a person is willing to play and the price paid.
Price Discrimination
The sale of an individual good at different prices to different consumers.
Opportunity Cost
The most desired goods or services that are forgone in order to obtain something else.
Optimal Consumption
The mix of consumer purchases that maximizes the utility attainable from available income
Shift in Demand
A change in the quantity demand at any (every) price.
