Completeness, transitivity, continuity, and non-satiation.
What is completeness in terms of utility features?
Completeness means that consumers are able to rank all possible bundles of goods in order of preference.
What is transitivity in terms of utility features?
Transitivity means that if a consumer prefers bundle A to bundle B, and bundle B to bundle C, then they also prefer bundle A to bundle C.
What is continuity in terms of utility features?
Continuity means that if a consumer prefers bundle A to bundle B, and bundle B is close enough in value to bundle C, then they will also prefer bundle A to bundle C.
What is non-satiation in terms of utility features?
Non-satiation means that consumers always prefer more of a good as opposed to less.
What is the difference between ordinal and cardinal utility?
Ordinal utility is the ranking of bundles of goods in order of preference, while cardinal utility assigns specific numerical values to each bundle.
What is the axiom of independence in terms of utility features?
The axiom of independence means that a consumer's preferences between two bundles of goods should not change if a third bundle is introduced that is not preferred to either of the first two.
What is the difference between total and marginal utility?
Total utility is the overall satisfaction a consumer receives from consuming a certain quantity of a good, while marginal utility is the additional satisfaction a consumer receives from consuming one more unit of the good.
What is the law of diminishing marginal utility?
The law of diminishing marginal utility states that as a consumer consumes more of a good, the additional satisfaction they receive from each additional unit of the good decreases.
What is an indifference curve?
An indifference curve is a graph showing all the combinations of two goods that provide a consumer with the same level of satisfaction.
What is the slope of an indifference curve?
The slope of an indifference curve represents the rate at which a consumer is willing to substitute one good for another while maintaining a constant level of satisfaction.
What is a budget constraint?
A budget constraint is the limit a consumer faces on the amount they can spend to purchase goods.
What is the optimal bundle of goods for a consumer?
The optimal bundle of goods for a consumer is the combination of goods that provides the highest level of satisfaction given the consumer's budget constraint.
What is the difference between a normal good and an inferior good?
A normal good is a good for which demand increases as income increases, while an inferior good is a good for which demand decreases as income increases.
What is the income and substitution effect?
The income effect is the change in the quantity of a good demanded due to a change in the consumer's purchasing power. The substitution effect is the change in the quantity of a good demanded due to a change in the relative price of the good.
What are the four utility features?
Completeness, transitivity, continuity, and non-satiation.
What is completeness in terms of utility features?
Completeness means that consumers are able to rank all possible bundles of goods in order of preference.
What is transitivity in terms of utility features?
Transitivity means that if a consumer prefers bundle A to bundle B, and bundle B to bundle C, then they also prefer bundle A to bundle C.
What is continuity in terms of utility features?
Continuity means that if a consumer prefers bundle A to bundle B, and bundle B is close enough in value to bundle C, then they will also prefer bundle A to bundle C.
What is non-satiation in terms of utility features?
Non-satiation means that consumers always prefer more of a good as opposed to less.
What is the difference between ordinal and cardinal utility?
Ordinal utility is the ranking of bundles of goods in order of preference, while cardinal utility assigns specific numerical values to each bundle.
What is the axiom of independence in terms of utility features?
The axiom of independence means that a consumer's preferences between two bundles of goods should not change if a third bundle is introduced that is not preferred to either of the first two.
What is the difference between total and marginal utility?
Total utility is the overall satisfaction a consumer receives from consuming a certain quantity of a good, while marginal utility is the additional satisfaction a consumer receives from consuming one more unit of the good.
What is the law of diminishing marginal utility?
The law of diminishing marginal utility states that as a consumer consumes more of a good, the additional satisfaction they receive from each additional unit of the good decreases.
What is an indifference curve?
An indifference curve is a graph showing all the combinations of two goods that provide a consumer with the same level of satisfaction.
What is the slope of an indifference curve?
The slope of an indifference curve represents the rate at which a consumer is willing to substitute one good for another while maintaining a constant level of satisfaction.
What is a budget constraint?
A budget constraint is the limit a consumer faces on the amount they can spend to purchase goods.
What is the optimal bundle of goods for a consumer?
The optimal bundle of goods for a consumer is the combination of goods that provides the highest level of satisfaction given the consumer's budget constraint.
What is the difference between a normal good and an inferior good?
A normal good is a good for which demand increases as income increases, while an inferior good is a good for which demand decreases as income increases.
What is the income and substitution effect?
The income effect is the change in the quantity of a good demanded due to a change in the consumer's purchasing power. The substitution effect is the change in the quantity of a good demanded due to a change in the relative price of the good.