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Budgets and Demand
Terms in this set (14)
An allocation with the property that there is no alternative technically feasible allocation in which at least one person would be better off,and nobody worse off
Budget Line is given by Paa + Pbb = m
The set of affordable bundles
price of good x increases and the demand for good y increases.
price of good x decreases and the demand for good y increases.
must obey the law of demand. The substitution effect is always negative
often obey the law of demand
The income effect is in opposition to the substitution effect
When the income effect outweighs substitution effect. never obey the law of demand. They're rare
the effect of a price change on the quantity demanded due exclusively to the fact that its relative price had changed
the effect of a price change on the quantity demanded due exclusively to the fact that the consumer's real income has changed
The Law of Demand
demand falls when price rises
The Long Run
All factors of production are variable
The Short Run
At least one factor of production is fixed
THIS SET IS OFTEN IN FOLDERS WITH...
Nature and Human Well-being
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