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review1 - slides

review1 - slides - Midterm Review USC Marshall Overview...

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3/6/2009 1 Midterm Review USC Marshall Overview Consumer choice – Utility maximization and competitive demand – Choice under uncertainty Producer choice – Profit maximization and competitive supply USC Marshall Competitive markets – Equilibrium and efficiency – Failure of competitive markets in the presence of externalities Government – Taxes and subsidies Consumer choice Consumer preferences – How a consumer would rank consumption bundles if given the opportunity to choose among them • Better-than, equal, worse-than Consumer constraints USC Marshall – Consumer choice is constrained by the income available and the prices of different goods Preferences + constraints Æ optimal choice of consumption
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