Econ103-Assign 1 - Summer 2009 Principles of...

Summer 2009 Date: May 20, 2009
Principles of Microeconomics (Econ 103)
Assignment # 1
(Your explanation will carry all the marks)
Due on May 27, 2009
(Please hand in your assignments during the lecture on Wednesday)
Q.1 What do we mean my maximization? Why do we want to maximize? (10 points)
We can to get much utility as we can. Everybody are greed, we want to get more
than we can get while many things are limited to have.
Q.2 I know what my income is and what the prices of goods that I buy are. Do I still
need to know the concept of relative prices and real income? (10 points)
Sometimes the nominal income change, the prices of goods will change too.
Using real income and relative prices is a way to measure purchasing power in
terms of goods and services.
Q.3 Why do two people trade? (5 points)
When two people have different marginal values on goods, they will trade.
Q.4 Why demand curve always slopes downward? (10 points)
The more goods people have, they are willing to sacrifice and to pay will
decrease.