Chapter 6

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  1. denotes satisfaction, a subjective pleasure that an individual can derive from consuming a good or service
    Utility
  2. It is how individuals divide their limited sources among the commodities that provide them satisfaction
    Utility
  3. It states that the consumer prefers the best bundle of goods he or she can afford
    Te economic theory of consumer
  4. What are the factors that make a consumer decide?
    • Tastes or Preferences
    • Income
    • Price
  5. Ways of measuring utility
    • Cardinal Utility Theory
    • Ordinal Utility Theory
  6. It is used to quantify satisfaction in the past
    Cardinal Utility Theory
  7. attaches specific numbers to different levels of satisfaction
    Cardinal Ranking of Preferences
  8. Used as an alternative to Cardinal Utility Theory
    Ordinal Utility Theory
  9. They said that the only thing consumers can do is to rank or order his preferences
    Ordinalists
  10. It will tell something about an individual's personality
    Tastes and Preferences
  11. They depict which goods provide satisfaction and how much satisfaction will he or she receive
    Tastes and Preferences
  12. States that each successive improvement in health generates less and less additions to total utility
    Law of Diminishing Marginal Utility
  13. As more goods are consumed, the extra satisfaction or marginal utility received decreases
    Law of Diminishing Marginal Utility
  14. It is the measurement for tility
    Utils
  15. When total utility is maximized with regard to his income
    Equilibrium
  16. Three assumption of rational preferences
    • Completeness
    • Non-Satiation
    • Transitivity
  17. It implies that a bundle of good can be ranked as preferred, indifferent or less preferred
    Completeness
  18. It means that you choose one bundle over the other
    Preffered
  19. It means that you will get the same satisfaction with two bundles
    Indifferent
  20. "More is better"
    Non-satiation
  21. a bundle with more of one good and no less of the other is preferred or indifferent to as otherwise equivalent bundle
    Non-Satiation
  22. It is explained by the foregoing assumption
    Transitivity
  23. It is a curve that shows the different combinations of Good X and Good Y which yield the same level of utility
    Indifference curve
  24. 3 characteristics or Indifference curves
    • Indifference curves are negatively sloped
    • Indifference curves are usually convex to origin
    • Indifference curves do not intersect
  25. The amount of Good Y that a consumer is willing to give up in exchange for Good X and still lie on the same indifference curve
    Marginal Rate of Substitution
  26. It shows the different combinations of Good X and Good Y that a consumer can purchase given his income and prices of goods
    Budget line
  27. It is a collection of points of consumer equilibrium resulting from varying income
    Income Consumption Curve
  28. It shows the amount of a commodity that the consumer would buy per unit of time at different levels of income
    Engel Curve
  29. Normal good
    Positively sloped Engel Curve
  30. Inferior good
    Negatively sloped Engel Curve
  31. It is when a consumer is consuming greater amounts of Good X in relation to income
    Luxury good
  32. It is a collection of points of consumer's equilibrium resulting from varying prices of Good Y
    Price Consumption Curve

Card Set Information

Author:
 Mingming
ID:
 281382
Filename:
 Chapter 6
Updated:
2014-08-26 21:36:31
Tags:
Chapter6 Heath Economics
Folders:
Health Economics
Description:
The Consumer Behaviour
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