Match each of the terms on the left with its definition on the right. Click on the term first and then click on the matching definition. As you match them correctly they will move to the bottom of the activity.
Budget constraint Marginal utility Principle of diminishing marginal utility Consumption bundle Marginal utility curve Optimal consumption rule Marginal utility per dollar Utility Utility-maximizing principle of marginal analysis Income effect Giffen good Util Substitution effect Budget line Consumption possibilities Optimal consumption bundle Utility function | the proposition that each successive unit of a good or service consumed adds less to total utility than did the previous unit. the set of all consumption bundles that can be consumed given a consumer’s income and prevailing prices. the change in the quantity of a good consumed that results from the change in a consumer’s purchasing power due to the change in the price of the good. (of an individual) the total utility generated by an individual’s consumption bundle. the change in total utility generated by consuming one additional unit of a good or service. the change in the quantity of a good consumed as the consumer substitutes other goods that are now relatively cheaper in place of the good that has become relatively more expensive. the principle that the marginal utility per dollar spent must be the same for all goods and services in the optimal consumption bundle. the collection of all the goods and services consumed by a given individual. the consumption bundle that maximizes a consumer’s total utility given that consumer’s budget constraint. all the consumption bundles available to a consumer who spends all of his or her income. the additional utility gained from spending one more dollar on a good or service. the limitation that the cost of a consumer’s consumption bundle cannot exceed the consumer’s income. the hypothetical inferior good for which the income effect outweighs the substitution effect and the demand curve slopes upward. a unit of utility. the optimal consumption bundle is on the budget line and the marginal utility per dollar spent on each good in the bundle is equal. a graphical representation showing how marginal utility depends on the quantity of the good or service consumed. (of a consumer) a measure of the satisfaction derived from consumption of goods and services. |