Marginal Analysis and Consumer Choice - AP Microeconomics

Marginal utility is not diminishing. Unusual case contradicting typical diminishing marginal utility.

$MC = 20$. Change in total cost ($100$) divided by change in quantity ($5$).

Difference between willingness to pay and actual payment. Benefit exceeding what consumer actually pays for good.

$MR = 10$. Change in total revenue ($30$) divided by change in quantity ($3$).

$MU = \frac{\triangle TU}{\triangle Q}$. Change in total utility divided by change in quantity.

Infinite price for one good. One good has zero quantity available at any finite price.

$AC$ is decreasing. When marginal cost is below average, it pulls average down.

$\frac{MU}{P}$. Marginal utility divided by the price of the good.

Point where an indifference curve is tangent. Where budget line touches highest possible indifference curve.

Violation of the non-satiation assumption. Consumer prefers less of at least one good, violating normal preferences.

Satisfaction or pleasure from consumption. Subjective measure of happiness or benefit from consuming goods.

Ratio of the prices of two goods. Reflects relative opportunity cost between two goods.

$\frac{MU}{P} = 5$. Simple division: $10 ÷ 2 = 5$.

Maximizing total utility from consumption. Consumers seek to maximize satisfaction given their constraints.

Under-utilization of budget. Consumer can afford more but chooses not to spend fully.

Shows combinations of goods with equal utility. Consumer is indifferent between any points on the curve.

Marginal utility typically decreases. Follows the law of diminishing marginal utility.

Combination of goods a consumer can afford. Limited by income and relative prices of goods.

Change in consumption from relative price change. How quantity demanded changes when relative prices change.

Value of the next best alternative foregone. The economic value of what you give up when making a choice.

$MR = \frac{\triangle TR}{\triangle Q}$. Change in total revenue divided by change in quantity.

$MC = 20$. Change in total cost ($200$) divided by change in quantity ($10$).

$\frac{MU_X}{P_X} = 4$. Marginal utility ($20$) divided by price ($5$) equals $4$.

$\frac{MU_X}{P_X} = \frac{MU_Y}{P_Y}$. Marginal utility per dollar spent is equal across all goods.

A set of indifference curves. Collection showing all possible utility levels for a consumer.

$MU = 5$. Change in total utility ($10$) divided by change in quantity ($2$).

When $P = MC$. Price equals marginal cost ensures optimal resource allocation.

$AR = \frac{TR}{Q}$. Total revenue divided by quantity sold.

Change in consumption from change in real income. How quantity demanded changes when purchasing power changes.