MiniSchedule1Spring08 - Marginal rate of substitution (MRS)...

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1 Economics 313-1 Cornell U. Talia Bar Spring 2008 Mini Schedule 1 II The Consumer Budget Constraint (Ch-2) Consumption bundle Budget set Budget line (slope, intercept) Opportunity cost Changes to the budget line Numeraire Preferences (Ch-3) Strictly prefers, indifferent, weakly prefers Preference relation axioms: (complete, reflexive, transitive) Rational consumer Indifference curves (no crossing) Monotone preferences Weakly preferred sets Convex preferences Continuous preferences Well behaved preferences Utility (Ch- 4) A utility function Ordinal Utility/ Cardinal Utility Monotonic transformation Marginal utility (MU), partial derivatives
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Unformatted text preview: Marginal rate of substitution (MRS) Diminishing MRS Important families of utility functions Perfect substitutes Perfect complements Cobb-Douglas Quasilinear Notes: • The text book introduces the MRS already in chapter 3, you can skip this part and come back to it when we learn utility. • The text book definition of the MRS has the opposite sign to the redefinition we gave in class. You may use the alternative definition as long as you understand the difference and apply it correctly when needed. Readings are from Varian, Intermediate Microeconomics , 6 th Edition. Chapter numbers may vary in the different editions....
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This note was uploaded on 02/23/2008 for the course ECON 3130 taught by Professor Masson during the Spring '06 term at Cornell.

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