- Microeconomics Class Notes Chapter#3 Workbook 1-9 24 Textbook(end of chapter 1-7 9 10 14 UTILIT Y FUNCTIONS Smaller numbers for utility = goods

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Microeconomics – Class Notes – 1/30/09 Chapter #3: Workbook : 1-9, 24 Textbook (end of chapter): 1-7, 9, 10, 14 UTILIT Y FUNCTIONS Smaller numbers for utility = goods you like LESS Larger numbers for utility = goods you like MORE Same numbers = like equally well Constants (a, b) in front of the variable tells you how much you like one good versus the other good: - A larger number means we - Monotonic transformation – takes once set of numbers and transform them into another set of numbers in a way that maintains their order and their ranking.
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Perfect Complements The break in the L-shaped indifference curve depends on the relative position along the budget constraint Use the minimum function (to get the shape of the function for PERFECT COMPLEMENTS):
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What if…? - You always consume (fixed ratio) 2 units of X with 1 unit of Y. - What would your function look like? o This does not mean that you are willing to give up 2 units to get 1. o
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This note was uploaded on 06/03/2009 for the course ECON 200 taught by Professor Nonnenmacher during the Spring '09 term at Allegheny.

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- Microeconomics Class Notes Chapter#3 Workbook 1-9 24 Textbook(end of chapter 1-7 9 10 14 UTILIT Y FUNCTIONS Smaller numbers for utility = goods

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