Chapter 3 Scarcity, Work and Choice Flashcards
1
Q
What is the feasible set equivalent to?
A
The feasible set is the same as a PPF it just shows what is possible with an amount of resources.
2
Q
What is the marginal rate of transformation?
A
The marginal rate of transformation represents the trade-offs that an individual faces between two points on a feasible set.
3
Q
What is utility?
A
The total satisfaction received from consuming one product or service.
4
Q
Is there diminishing returns to receiving money?
A
Yes
5
Q
What are the four key properties of indifference curves?
A
Indifference curves slope downward due to trade-offs
Higher indifference curves correspond to higher utility levels
As you move to the right along an indifference curve, it becomes flatter.
Indifference curves cannot cross.
