1Microeconomics PrinciplesFebruary 25, 2008Consumer Purchase DecisionsAdministrativeExam Review Session:zTomorrow (Tuesday 2/26) at 5pmzLocation: D.P. Corbett 115For Exam:zBring PencilzBring your Empl ID from WebCT (look under ‘my grades’)zMay bring a calculator (for elasticity calculations)Today’s OutlineFinish Chap 7 AppendixExam Wrap- UpYou proved…. Utility Maximizing RulezAllocate incomeso that last dollar spent on each activity yields the same MUzPut Marginal Utility on a per-dollar spent basis!zMu1/P1= Mu2/P2Examples cont.UnitsMUMU1/P1MU2MU2/P21101024122882010377189466168555126If P1= 1, P2=2How would you spend your money??MU Per dollar!Graphing…Chapter 7 AppendixHow do we graph the “indifference” when MU/P = MU2/P2?
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