Microeconomic Theory
All 9 Microeconomic Theory terms in the AP Economics glossary — each with a clear, exam-accurate definition. Tap any term for the full explanation, formula, and related interactive graph.
An indifference curve shows all combinations of two goods that give a consumer the same total satisfaction (utility).
The marginal rate of substitution is the rate at which a consumer will give up one good to get more of another while staying equally satisfied.
A Giffen good is a rare good whose quantity demanded rises when its price rises, violating the law of demand.
A Veblen good is a luxury good whose demand increases as its price rises, because the high price signals status.
Economies of scope exist when it is cheaper to produce several products together than to produce each separately.
A network effect occurs when a product becomes more valuable to each user as more people use it.
Price leadership is when one dominant firm sets a price that other firms in the industry follow, common in oligopolies.
Rent-seeking is spending resources to gain wealth through favorable policy or market position rather than by producing value.
A two-part tariff is a pricing scheme with a fixed entry/access fee plus a separate per-unit price, used to capture consumer surplus beyond a single uniform price.