The slope of the indifference curve.

The ratio of the amounts of the two goods at a point on the indifference curve.

The amount of one good that the consumer is willing to trade for one unit of the other.

The change in the consumer’s utility when one good is substituted for another.

Frank inherits a house from his aunt that he rents out, which provides him with an extra monthly income on top of his income from work. He will reach a new optimum where his utility definitely increases.

Continuation of the previous statement. The opportunity cost of a free day decreases as a result of the rent Frank receives.

The indifference curves of a workaholic are extremely steep.

After his heart attack, Luis came to realize that he should enjoy life more. His indifference curves became steeper.

Suppose the government taxes labour income at a rate of 20%. As a result the worker’s marginal rate of transformation decreases.

The introduction of an income tax as in the previous statement will induce a worker to work more.

An increase in the wage rate would cause a parallel upward shift in the budget constraint.

The slope of the budget constraint is the negative of the wage rate (–15).

A gift of $60 would make the budget constraint steeper, with the intercept on the vertical axis increasing to $300.

The budget constraint is a feasible frontier with a constant marginal rate of transformation.

The cost of a gap year.

The income she would have earned at Barclays.

The potential friendships she could form with colleagues at Barclays

The income she would have earned on her gap year.

Malthusianism provided an explanation of why income would stay constant over centuries without trending upwards.

The predictions of Malthus were correct throughout 19th century Britain.

Malthus held that a sustained increase in income per capita would be impossible.

According to Malthusianism, the rise in productivity of labour would be offset by population growth.

Ceteris paribus is an assumption used in economic models in which the important variables that you are focusing on are kept constant.

An equilibrium is a self-perpetuating situation that does not change, even when a force for change is introduced from the outside that alters the basic data describing the situation.

An economic rent is the benefit you receive above what you would have earned from your reservation option.

In economics, a model is a simplified representation (diagrammatical or physical) that helps us to understand what is going on by focusing attention on what is important.