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Unformatted text preview: Summary Outline of Topics/Concepts Consumer Choice o Positive vs. Normative Analysis o Basic Concepts (bundles, tradeoffs) o Preferences o Representing preferences with Indifference Curves Constructing Indifference Curves Marginal Rate of Substitution (MRS) Indifference Maps Properties of Indifference Curves/Maps o Representing preferences using Utility Functions Utility: cardinal vs. ordinal utility Concept of Marginal Utility MRS = MUx/MU y o Feasibility and Budget Constraints o Standard budget constraints o Shifts in budget constraints o Other types of budget constraints o Predicting Consumer Choices o Combining feasibility and desirability o Standard condition for utility maximization MRS = Px/P y MUx/Px= MUylP y MB=MC o Comer solutions o Effects of an income change Normal vs. inferior goods o Effect of price changes Substitution and Income Effects Applications of SE and IE Cost-of-Living Adjustments Joining Sam's Club Taxes vs. Subsidies to Reduce Climate Change Effect of interest rates on savings Effect of wages changes on labor supply o Derivation of Demand Curves Individual demand curves Market demand curves Consumer surplus Network Externalities o Choice Under Uncertainty o Expected value vs. expected utility o Risk aversion o Example: Buying insurance...
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This note was uploaded on 05/04/2008 for the course ECON 218 taught by Professor Segerson during the Spring '08 term at UConn.
- Spring '08