def IO chapter 2

individual or consumer choice and ranking of goods and servies based on personal tastes and values

graphical representation showing combinations of 2 goods that provide the consumer with the same level of satisfaction or utility

all possible combinations of goods and services that consumer can purchase given their income and prices of goods 

economic principle that consumer aim to allocate their income in a way that maximizes their total satisfaction or utility

mathematical representation of the relationship between the quantity demanded of good and its determinants such as price income and preferences

function that expresses the price of good as a function of the quantity demanded 

graphical representation of the relationship between the quantity demanded of a good and its price

max amount a consumer is willing to sacrifice to acquire a good or service

difference between what a consumer is willing to pay for a good and what they actually pay

measure of how the quantity demanded of a good responds to a change in its price 

measure of how the quantity demanded of one good reponds to a change in the price of another good 

goods that can be used in place of each other, as they satisfy similar needs

goods that are typically used together so a change in the price of one affects the demand for the other 

measure of how quantity demanded of a good reponds to change in consumer income 

goods for which demand increases as consumer income falls

goods for which demand increases as consumer income rises

goods for which is not affected by income

goods for which demand increases more than porportionally as income rises

in econometrics the challenge of determing the true causal relationship between varaibles in statiscal models

Variables used in econometrics to address endogeneity and identify causal relationships in observational data.

Behavioral economic theory describing how people make decisions under uncertainty, emphasizing the role of perceived gains and losses