Flashcards: ECO Chapers 4-6 quiz

the satisfaction or value someone gains from obtaining goods and services.

the satisfaction obtain from a consumer’s choices

the additional utility that is provided by the additional unit that is consumed.

the pattern that every marginal unit of a good consumed provides less additions to the utility than the last unit. 

where the consumer gets the most satisfaction (highest number), when the price of goods is equal to the ratio of marginal utilities. 

a branch of economics that seeks to understand the behavior or thought process behind a consumer’s decision-making. As well as how money can mean different things to everyone depending on their situation. 

is that losing money hurts more than gaining money. 

that different goods are capable of having different substitutions with each other and all have equal value.

the measure of the responsiveness of one variable that then changes to another variable.

is a good that increases in demand when a consumer’s purchase power increases. An example would be clothing or household appliances. 

is a good whose demand decreases when consumers increase. An example would be used cars or pizza.

is when there are two goods and there’s a percentage change in one good that is demanded due to a percentage change in the price of the other good. 

is an extreme example. It means that the quantity demanded will increase to infinity. “see infinite elasticity” An example would be luxury products such as jewelry or cars. The direction of the slope is horizontal.

is an extreme case, necessities with no close substitutes will likely have high demand curves. An example would be life-saving prescription drugs. The direction of the slope is vertical

Total revenue

Luxury items are elastic because when a consumer’s income increases, demand increases. You also usually have other goods or services that can substitute these luxury items. 

Inelastic because there are never really any substitutes for necessity items and so they’re highly demanded.

Minimum wage laws are a price floor that makes it illegal for an employer to pay an employee less than what is required. Living wage is a concept, not a law. It’s a wage that a person who works 40 hours a week can live on. Those who use a living wage view the minimum wage as too low for their standard of living. 

Usary laws are laws that input a limit on interest rates that usually lenders are able to charge. 

are the prices that are given when you borrow from a bank or the financial market. For example, if you invest in a credit card you need to pay interest because you are borrowing money from the financial market. It is the rate of return.

The “price” is commonly called a wage or wages in the labor market. 

Economists define equilibrium as when both supply and demand balance each other or are equal in financial markets.

Households are demanders in the financial markets because they are always looking to purchase goods or services therefore creating a demand in the financial markets.

Firms are demanders in the labor market because they’re always looking for workers and employees to do labor for their business and work for their company in order for them to be suppliers in the financial market.

is when participants in the financial markets have to make decisions when spending their money. These are decisions that occur over time.

Financial capital is someone’s savings.