Lecture 4 Macroeconomic Choice 1: the Social Planner

Question 1

consumption goods

Answer 1

those we get pleasure from

Question 2

capital goods

Answer 2

used to produce other goods

Question 3

utility function

Answer 3

relationship between consumption and happiness

Question 4

law of non-satitiation

Answer 4

As c rises, so does U

Question 5

law of diminishing marginal utility

Answer 5

as you consume more, U rises, but at a slower rate

Question 6

indifference curve

Answer 6

all the combinations of consumption of two goods that give equal levels of utility (convex, never cross)