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Consumer Choice (Budget Constraint (Consumption bundles, Limit, Consumer,…
Consumer Choice
Budget Constraint
Consumption bundles
Limit
Consumer
Consume
Less
Desire
Constrained
Various combination of goods
Can afford
Price
Trade-off
Slope
Indifference Curves
Indifference curves are downward sloping
Willing
One good
Consumer
Equally happy
Slope downward
Quantity
Reduced
Increase
Points
Along
Indifference curves do not cross
Consumer
Equally happy
Point
Higher indifference curves are preferred to lower ones
Prefer more
Less
Consumer
Larger quantities
Goods
Indifference curves are bowed inward
Trade
Abundance
Willing
Consumer
Marginal substitution rates