{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

econ302 final study guide - -Ratio of Y/X independent of...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Definitions Marginal Utility: the change in utility when X increases by 1 unit while all other variables are constant - Partial derivative of the utility function with respect to X Cobb-Douglas: U(X,Y) = X^alpha * Y^beta - Decreasing MRS everywhere - 2 goods are imperfect substitutes - Ratio of Y/X only independent of income Leontieff: U(X,Y) = min{alpha X, beta Y} - 2 goods are perfect compliments
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: -Ratio of Y/X independent of income AND price Linear Utility: U(X,Y) = alpha * X + beta * Y-Constant MRS everywhere, independent-2 goods are perfect substitutes Due to Substitution Effect: 1) Government imposes a tax 2) Change in X1 to Xb Due to Income Effect: 1) Change in Xb to X2 Due to Both: 1) Price increases 2) Price decreases 3) Change in X1 to X2...
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online