NDSU ECON 201 EXAM 3
income elasticity of demand - Answer-shows the responsiveness of consumers to changes in income
Eyd = - Answer-% change Qx / % change of y
Q'-Q0 / sum is divided by - Answer-Y'-YO / sum
a negative answer will signify a(n) - Answer-inferior good
a positive answer will signify a(n) - Answer-normal good
price elasticity of supply - Answer-shows us the responsiveness of quantity supplied to price changes
Eps = - Answer-% change Qx / % change Px
Q'-QO / sum divided by - Answer-P'-PO / sum
consumer surplus - Answer-is the difference between the max price that consumers are willing to pay
and the price that they actually pay
equal marginal rule - Answer-consumers will consume each good in their bundle of consumption such
that the marginal utility per dollar spent is equal for all goods
, MUx / Px = - Answer-MUy/Px
MUx / Px - Answer-marginal utility of x / price of x
MUy / Px - Answer-marginal utility of y / price of y
assumptions - Answer-1.) each customer has one budget
2.) consumer are rational
indifference curve - Answer-shows all combinations of two goods which yield consumers equal amounts
of satisfaction
single indifference curve - Answer-is a locus of points that are all from the same level of utility
difference curve - Answer-has to have a downward slope with a convex shape to it
marginal rate of substitution (MRS) - Answer-is the amount of one good a consumer could substitute for
another good to remain equally satisfied
MRS - Answer-slope of the indifference curve
indifference curves - Answer-cannot cross
budget line - Answer-Shows all of the maximum combinations of 2 goods that a consumer is able to
select, given their income and the price of the 2 goods
income elasticity of demand - Answer-shows the responsiveness of consumers to changes in income
Eyd = - Answer-% change Qx / % change of y
Q'-Q0 / sum is divided by - Answer-Y'-YO / sum
a negative answer will signify a(n) - Answer-inferior good
a positive answer will signify a(n) - Answer-normal good
price elasticity of supply - Answer-shows us the responsiveness of quantity supplied to price changes
Eps = - Answer-% change Qx / % change Px
Q'-QO / sum divided by - Answer-P'-PO / sum
consumer surplus - Answer-is the difference between the max price that consumers are willing to pay
and the price that they actually pay
equal marginal rule - Answer-consumers will consume each good in their bundle of consumption such
that the marginal utility per dollar spent is equal for all goods
, MUx / Px = - Answer-MUy/Px
MUx / Px - Answer-marginal utility of x / price of x
MUy / Px - Answer-marginal utility of y / price of y
assumptions - Answer-1.) each customer has one budget
2.) consumer are rational
indifference curve - Answer-shows all combinations of two goods which yield consumers equal amounts
of satisfaction
single indifference curve - Answer-is a locus of points that are all from the same level of utility
difference curve - Answer-has to have a downward slope with a convex shape to it
marginal rate of substitution (MRS) - Answer-is the amount of one good a consumer could substitute for
another good to remain equally satisfied
MRS - Answer-slope of the indifference curve
indifference curves - Answer-cannot cross
budget line - Answer-Shows all of the maximum combinations of 2 goods that a consumer is able to
select, given their income and the price of the 2 goods
