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.
Utility Consumption bundle Utility function Util Marginal utility Marginal utility curve Principle of diminishing marginal utility Budget constraint Consumption possibilities Budget line Optimal consumption bundle Marginal utility per dollar Utility-maximizing principle of marginal analysis Substitution effect Income effect Giffen good | the limitation that the cost of a consumer’s consumption bundle cannot exceed the consumer’s income. the proposition that each successive unit of a good or service consumed adds less to total utility than did the previous unit. (of an individual) the total utility generated by an individual’s consumption bundle. 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. the change in total utility generated by consuming one additional unit of a good or service. a graphical representation showing how marginal utility depends on the quantity of the good or service consumed. the additional utility gained from spending one more dollar on a good or service. a unit of utility. (of an individual) the collection of all the goods and services consumed by a given individual. the set of all consumption bundles that can be consumed given a consumer’s income and prevailing prices. (of a consumer) a measure of the satisfaction derived from consumption of goods and services. 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. all the consumption bundles available to a consumer who spends all of his or her income. the hypothetical inferior good for which the income effect outweighs the substitution effect and the demand curve slopes upward. the consumption bundle that maximizes a consumer’s total utility given that consumer’s budget constraint. the principle that the marginal utility per dollar spent must be the same for all goods and services in the optimal consumption bundle. |