Economics 115 Final- Yale Verified A+

Economics 115 Final- Yale Verified A+ opportunity cost ️️the value of the next best choice law of demand ️️as the price of a good increases, consumers' demand for that good should decrease complement good ️️a good that is purchased and used in combination with another good; when the price of this good goes up the quantity demanded of the complement goes down inferior good ️️goods that become less demanded as income increases consumer surplus ️️the buyers' benefit of being in the market, the total willingness to pay minus the amount that is actually paid by the consumer market equilibrium ️️quantity supplied equals quantity demanded substitute good ️️a good that can be used in place of another good demand curve ️️the relationship between the quantity of a good that is demanded and the good's price holding all other factors constant (q=a-bp) supply curve ️️the relationship between the quantity supplied of a good and the good's price, holding all other factors constant surplus ️️the amount by which quantity supplied exceed quantity demanded when market price is higher than the equilibrium price shortage ️️the amount by which quantity demanded exceeds quantity supplied when market price is lower than the equilibrium price price elasticity of demand ️️the percentage change in quantity demanded resulting from a 1% change in price elastic ️️a price elasticity with an absolute value greater than 1 inelastic ️️a price elasticity with an absolute value less than 1 unit elastic ️️a price elasticity with an absolute value of 1 perfectly inelastic ️️price elasticity of 0 meaning there is no change in quantity demanded or supplied for any change in price perfectly elastic ️️price elasticity of infinity meaning any change in price leads to an infinite change in quantity demanded or supplied normal good ️️a good for which quantity demanded increases when income rises producer surplus ️️the difference between the price at which producers are willing to sell their good or service and the price they actually receive price ceiling ️️a price regulation that sets the highest price that can be paid legally for a good or service deadweight loss (DWL) ️️the reduction in total surplus that occurs as a result of a market inefficiency price floor ️️a price regulation that sets the lowest price that can be paid legally for a good or service tax incidence ️️who actually pays the tax subsidy ️️a payment by the government to a buyer or seller of a good or service utility ️️measure of how satisfied a consumer is marginal utility ️️the additional utility a consumer receives from an additional unit of a good or service indifference curve ️️a mathematical representation of the combination of all the different consumption bundles that a consumer with the same utility (the slope equals MUx/MUy) marginal rate of substitution (MRS) ️️the rate at which a consumer is willing to take off one good (the good on the x-axis) for another good (the good on the y-axis) and still be left equally well off ( = (change in y)/(change in x)= MUx/MUy (the slope of the indifference curve)) perfect substitute ️️a good that a consumer can trade for another good and receive the same level of utility, indifference curves are straight linear lines perfect complement ️️a good whose utility level depends on its being used in a fixed proportion with another good (car and tires), indifference curves are L-shaped budget constraint ️️a curve that describes the entire set of consumption bundles a consumer can purchase when spending all income income effect ️️the change in a consumer's consumption choices that results from a change in the purchasing power of the consumer's income substitution effect ️️the change in a consumer's consumption choices that results from a change in the relative prices of two goods giffen good ️️very strong inferior good marginal product ️️the additional output that a firm can produce by using an additional unit of input holding use of all other inputs constant isoquant ️️a curve representing all the combinations of inputs that allow a firm to make a particular quantity of output isocost line ️️a curve that shows all of the input combinations that yield the same cost increasing returns to scale ️️a production function for which changing all inputs by the same proportion changes output by proportionally more decreasing returns to scale ️️a production function for which changing all inputs by the same proportion changes output by proportionally less fixed cost ️️an input cost that does not vary with the amount of output, even if the output is 0 sunk cost ️️a cost that cannot be recovered no matter what variable cost ️️the cost of inputs that vary with the quantity of the firm's input average fixed cost ️️a firm's fixed cost per unit of output average variable cost ️️a firm's variable cost per unit of output marginal cost ️️the additional cost of producing one additional unit of output short-run total cost curve ️️the mathematical representation of a firm's total cost of producing different quantities of output at a fixed level of capital