- Module 51 .1: Explain why a rational consumer who has diminishing marginal utilit...
- Module 51 .2: In the following two examples, find all the consumption bundles tha...
- Module 51 .3: In Table 51.3 you can see that the marginal utility per dollar spen...
- Module 51 .4: A consumer is spending all of her income and receiving 100 utils fr...
- Module 51 .5: The optimal consumption bundle is always represented by a point a. ...
Solutions for Chapter Module 51 : Utility Maximization
Full solutions for Krugman's Economics for AP* | 2nd Edition
total revenue divided by the quantity sold
a group of firms acting in unison
a difference in wages that arises to offset the nonmonetary characteristics of different jobs
two goods for which an increase in the price of one leads to a decrease in the demand for the other
a tax designed to induce private decision makers to take account of the social costs that arise from a negative externality
the offering of different opportunities to similar individuals who differ only by race, ethnic group, sex, age, or other personal characteristics
income elasticity of demand
a measure of how much the quantity demanded of a good responds to a change in consumers’ income, computed as the percentage change in quantity demanded divided by the percentage change in income
law of supply and demand
the claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded for that good into balance
median voter theorem
a mathematical result showing that if voters are choosing a point along a line and each voter wants the point closest to his most preferred point, then majority rule will pick the most preferred point of the median voter
the study of how households and firms make decisions and how they interact in markets
the total income in the economy that remains after paying for consumption and government purchases
the claim that unemployment eventually returns to its normal, or natural, rate, regardless of the rate of inflation
the percentage of the population whose family income falls below an absolute level called the poverty line
variables measured in physical units
regulations on the minimum amount of reserves that banks must hold against deposits
government policy aimed at protecting people against the risk of adverse events
the change in consumption that results when a price change moves the consumer along a given indifference curve to a point with a new marginal rate of substitution
a cost that has already been committed and cannot be recovered
a table that shows the relationship between the price of a good and the quantity supplied
the costs that parties incur in the process of agreeing to and following through on a bargain