Final Exam - Final Exam Econ 002 Chap. 9(end)-15&17...

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Final Exam Econ 002 Chapter 9 Utility – the enjoyment or satisfaction people receive from consuming goods and services Marginal Utility – the change in total utility a person receives from consuming one additional unit of a good or service - Change T.U. Change in # of units consumed Diminishing Marginal Utility – that as more of any good or service is consumed, its extra benefit declines Marginal Utility Per Dollar Two Effects of Price Change: - Income Effect – the change in the quantity demanded of a good that results from the effect of a change in price on consumer purchasing power, holding all other factors constant (If price changes, my overall purchasing power changes) - Substitution Effect - the change in the quantity demanded of a good that results from the a change in price making the good more or less expensive relative to other goods, holding constant the effect of the price change on consumer purchasing power (consume more of the cheaper good) Chapter 9A Indifference Indifference curve – a curve that shows the combinations of consumption bundles that gives the consumer the same utility Budget constraint – the limited amount of income available to consumers to spend on goods and services Coke Optimum Point I.C. B.C. Pepsi Chapter 10 Production Function – the relationship between the inputs employed by the firm and the maximum output it can produce with those inputs Total Product Marginal Product Average Product Fixed Inputs
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Variable Inputs Short Run Long Run
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This note was uploaded on 05/18/2008 for the course ECON 002 taught by Professor Mcleod,markpehlivan,ayseozg during the Spring '08 term at Pennsylvania State University, University Park.

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Final Exam - Final Exam Econ 002 Chap. 9(end)-15&17...

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