Chapter 7: Consumer Choices Flashcards

1
Q

Opportunity Cost

A

The cost of not doing something, because we did something else instead. Shifting of resources.

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2
Q

Substitution Effect

A

Price changes and consumers have incentive to consume less of a good with higher price, more of a good with lower price

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3
Q

Income Effect

A

Higher price means the buying power of income has been reduced, which leads to buying less of the good

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4
Q

Value

A

Personal biases and subjective beliefs

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5
Q

Use-Value

A

Human material production should be directed toward creation of things that benefit human beings (be thoughtful, not wasteful)

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6
Q

Utilitarianism

A

People maximize pleasure, minimize pain

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7
Q

Cardinal Utility

A

Objective/quantifiable utility a consumer assigns a product

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8
Q

Ordinal Utility

A

Subjective utility in the mind of the consumer, not measurable

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