Flashcards: Market Mechanisms and Consumer Choice — 19 cards

What does the rationality hypothesis state about consumer behavior?

Consumers seek to maximize satisfaction while minimizing expenditure.

What is marginal utility in consumer theory?

It is the utility of the last unit purchased by the consumer.

When does a consumer continue buying a product?

As long as the pleasure from the last unit is at least equal to its cost.

Why does a customer accept the fourth portion despite decreased pleasure?

Because it costs only one euro more, which the customer is willing to pay.

What is a market in economics?

A space where economic agents meet and supply and demand connect.

What does individual quantity represent?

The quantity chosen by a single buyer or seller at a given price.

How is market quantity defined?

The total of all individual quantities at a given price.

What is the market demand example given?

Market demand is $5 + 9 = 14$.

What is the market supply example given?

Market supply is $1 + 11 = 12$.

What form of competition is increasingly replaced by monopolistic or oligopolistic competition?

Perfect competition.

What two elements represent market equilibrium?

Equilibrium price and equilibrium quantity.

Where do firms offer goods and services in response to demand?

In a market.

Which author is named in connection with the explanation of the market?

Adam Smith.

What is producer surplus in economics?

The economic gain from selling above the minimum acceptable price.

Which types of costs are distinguished among production costs?

Direct costs, fixed costs, and variable costs.

What is the sequence of economic choice presented in the course?

From need to desire to demand.

What does demand associate with in economic terms?

Willingness to pay.

What does supply associate with in economic terms?

Willingness to sell.

What is consumer surplus according to the course?

The gain from the difference between willingness to pay and price paid.