StudySheetEcon - 10. Draw diagrams and narrate them to show...

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Study sheet for Economics and Competitive Advantage – Dr. Gasper, Fall, 2007 QUESTIONS ON CONCEPTS Please note that all definitions must be exact . If you genuinely know and understand a concept, you can define it exactly. 6. Define an indifference curve in the theory of individual consumer behavior. Define the budget line. An indifference curve is the locus of points representing market baskets among which the consumer is indifferent. The budget line shows all the combinations of quantities of goods X and Y that the consumer can buy with his available income. 7. State algebraically the condition for equilibrium in consumer indifference theory, and explain in detail what adjustments will be made if the consumer’s budget is not at equilibrium. Pending 8. Economists routinely consider that a change in the price of a good leads to a change in the amount or quantity demanded of that good, due to two effects of a price change, the substitution effect and the income effect. Define both of these
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This note was uploaded on 05/26/2010 for the course FINA 6260 taught by Professor Fort during the Spring '10 term at University of Arkansas for Medical Sciences.

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StudySheetEcon - 10. Draw diagrams and narrate them to show...

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