micro-fall2007-5

micro-fall2007-5 - Households Preferences Preferences...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Households Preferences Preferences Comparison between two consumption bundles x and z : x % z x is at least as good as z x & z x is strictly better than z x ¡ z x is exactly as good as z Ani Guerdjikova ECON 313 Fall 2007 60 ¡ 80 Households Preferences Preferences Comparison between two consumption bundles x and z : x % z x is at least as good as z x & z x is strictly better than z x ¡ z x is exactly as good as z Indi/erence curves are used to represent preferences graphically. Ani Guerdjikova ECON 313 Fall 2007 60 ¡ 80 Households Preferences Preferences Comparison between two consumption bundles x and z : x % z x is at least as good as z x & z x is strictly better than z x ¡ z x is exactly as good as z Indi/erence curves are used to represent preferences graphically. Given the budget constraint of the household, it is su¢ cient to know the indi/erence curves of the household in order to determine its optimal decision. Ani Guerdjikova ECON 313 Fall 2007 60 ¡ 80 Households Preferences 6- r r r r x 1 x 2 x z z z 00 x & z z ¡ x x ¡ z 00 Ani Guerdjikova ECON 313 Fall 2007 61 / 80 Households Preferences Marginal rate of substitution MRS = Δ x 2 Δ x 1 = z 2 & x 2 z 1 & x 1 6...
View Full Document

{[ snackBarMessage ]}

Page1 / 16

micro-fall2007-5 - Households Preferences Preferences...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online