Economics · Ch 8 — Theory of Consumer Behaviour
Key Concepts
Key Concepts
The key terms introduced in this chapter, gathered in one place for quick revision — a compact glossary for this CBSE Class …
The collection of all bundles of the two goods that a consumer can buy with her given income at the prevailing market prices — every bundle whose total cost, , is less …
The boundary of the budget set: all bundles that cost the consumer her entire income, satisfying . It is negatively slopi …
A consumer's ranking of the available bundles according to how desirable she finds them, letting her judge whether she likes one bundle more than, less than, o …
The situation in which a consumer regards two bundles as equally desirable, so that she has no reason to choose …
A locus of all bundles among which the consumer is indifferent; every point on it yields the same level of satisfaction. It is downward sloping and typi …
The rate at which a consumer is willing to give up units of one good to obtain one additional unit of the other while remaining equally satisfied; it equals the magnitude of the …
Preferences under which a bundle containing more of at least one good and no less of the other is always preferred — in short, more of a go …
The tendency of the marginal rate of substitution to fall as the consumer moves down along an indifference curve, giving the curve its co …
A family of indifference curves that together represent a consumer's entire set of preferences, where a curve farther from the origin denotes a hig …
A rule that assigns a numerical value to each bundle so that more-preferred bundles receive higher numbers, giving a compact numerical representation of …
The most-preferred affordable bundle, located where the budget line is tangent to the highest attainable indifference curve, so that the marginal rate of substit …
The quantity of a good that a consumer is willing and able to buy at a given price, taking her income, tastes and the prices o …
The general tendency for the quantity demanded of a good to rise when its price falls and to fall when its price rises, other thin …
A graph showing the quantity of a good a consumer chooses at different prices, holding income, tastes and other prices constant; it is ge …
The change in the quantity demanded of a good that arises purely from the change in its relative price, keeping the consumer on the sam …
The change in the quantity demanded of a good that results from the change in the consumer's real purchasing power when the …
A good whose demand increases when the consumer's income rises and decreases when he …
A good whose demand falls when the consumer's income rises and rises when her …
A good that can be used in place of another to satisfy a similar want, so that a rise in the price of one raises the demand for the other (for …
A good typically consumed together with another, so that a rise in the price of one lowers the demand for the other (for ex …
A measure of how responsive quantity demanded is to a change in price, defined as the percentage change in quantity demanded divided by the percentage change i …