Vocab
Units of satisfaction.
What is utils?
The common shape for budget constraints.
What is convex?
A massive automotive company opens a new plant into a small town.
What is a change in consumer income?
Social security, unemployment, medicaid, etc.
What are social insurance programs?
Decisions about quantities are best made incrementally.
What is marginal principle?
The collection of bundles with the same amount of utility.
What are indifference curves?
A new gas tax is going into effect next week.
TANF, SSI, EITC, etc.
What are cash transfers?
The true cost of something is the next best alternative you have to give up to get it
What is opportunity cost?
What is Price Ratio?
A new study reveals that drinking a glass of wine a day increases your lifespan by a 5 years.
What is a change in consumer preferences?
Provides specific goods or services directly to recipients, rather than cash.
What are in-kind transfers?
The phenomenon that each additional unit of consumption leads to an ever-smaller increase in value.
What is diminishing marginal utility?
The price of leisure in a labor time constraint.
What is foregone wages?
The price of peanut butter increases and the demand for jelly decreases the following week.
What is a change in price of a complement/substitute
The costs of redistribution.
What is the leaky bucket?
A change in behavior when your incentives change (i.e. you feel more inclined to sky dive after getting health insurance).
What is moral hazard?
Completeness, continuity, non-satiation, transitivity, and convexity
What are the main principles of indifference curves?
A town experiences a sudden influx of new residents and grocery prices begin to rise.
Consumption floor and phase out
What are types of redistribution policies?