Unite 3.1 And 3.2 Flashcards
What is scarcity
If a good is valued and there is an opportunity cost of acquiring more of it
How is daily income calculated
Y = wage x hours of work (wh)
How to work out the slope
Vertical change /horizontal change
What is consumption
When someone spends on consumer goods
What are goods
Something that people would like more of and something they care about
What are preferences
Relative values a person places on each possible outcome of a choice they have to make
What is utility
Numerical indicator of the value that one places on an outcome
What is an indifference curve
Curve that joins together all the combination of goods that provide a given utility
What do we assume about indifference curves?
They slope downwards due to trade offs
Higher curve = Higher utility
They are usually smooth
Indifference curves do not cross
The further right the more flat
What is the marginal rate of consumption
The trade off that a person is willing to make between two goods
= absolute value of slope
