Unit 3 Test Review

Marginal Utility

• The additional utility provided by one additional unit of consumption.

• Price Floor that makes it Illegal for an employer to pay employees less than a certain hourly rate.

• Total Satisfaction derved form consumer choices.

• shows the possible combinations of two goods that are affordable given a consumer's limited income.

Total Utility

• an economic concept that measures responsiveness of one variable to changes in another variable.

• When demand is great than one.

• Total satisfaction derived from consumer choices

• As we consume more of a good or service, the utility we get from additonial units becomes smaller than what we receieved from earlier units.

Minimum Wage

• price floor that makes it illegal for an employer to pay employees less than a certain hourly rate.

• total satisfaction derived form consumer choices.

• When a price changes, consumers have an incentive to consume less of the good with a relatively higher price and more of the good with a relatively lower price

• the additonal utility provided by one additional unit of consumption

Elasticity

• An economic concept that measures responsiveness of one variable to changes in another variable.

• total satisfaction derived form consumer choices.

• the additional utility provided by one additional unit of consumption

• when a price changes, consumers have an incentive to consume less of the good with a relatively higher price and more of the good with a relatively lower price.

Budget Constraint

• price floor that makes it illegal for an employer to pay employees less than a certain hourly rate.

• an economic concept that measures responsiveness of one variable to changes in another variable.

• When demand is greater than 1.

• Shows the Possible combinations of two goods that are affordable given a consumer's limited income.

Elastic Demand

• total satisfaction derived from consumer choices.

• When supply is less than one.

• When demand is greater than one.

• The additional utility provided by one additional unit of consumption

Inelastic supply

• shows the possible combinations of two goods that are affordable given a consumer's limited income

• When supply is less than one

• when demand is greater than one.

• the additional utility provided by one additional unit of consumption.

unitary

• the additional utility provided by one additional unit of consumption.

• when demand is greater than one.

• when supply is less than one

• When the calculated elasticity is equal to one indicating that a change in the price of the good or service results in a proportional change

Substitution Effect

• an economic concept that measures responsiveness of one variable to changes in another variable.

• When a price changes, consumers have an incentive to consume less of the good with a relatively higher price and more of the good with a relatively lower price.

• shows the possible combinations of two goods that are affordable given a consumer's limited income.

• price floor that makes it illegal for an employer to pay employees less than a certain hourly rate.

Diminishing marginal utility

• The additional utility provided by one additional unit of consumption

• As we consume more of a good or service, the utility we get from additional units becomes smaller than what we received from earlier units.

• the additional unit of consumptioin.

• when the calculated elasticity is equal to one indicating that a change in the price of the good or service results in a proportional change.