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EEM__Derived_Demand - EEM Derived Demand Click to edit...

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 9/9/09 Click to edit Master subtitle style EEM: Derived Demand
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 9/9/09 Comments on Economic Models Idealized visions of Imaginable worlds Not intended to be completely realistic Create a simplified world generate theoretical results then  compare to data Some models may seem unrealistic Job of the economist to test theories in order to ascertain  legitimacy
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 9/9/09 Markets For the first few weeks of this class we will focus on static  economic markets  Basic Demand and Supply Analysis P                          Supply                                             Demand     
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 9/9/09 Derived Demand: Assumptions Consumers know their preferences all applicable prices and  their income Consumer Spends all of their income Preferences can be modeled using well behaved utility  functions Don’t worry about ‘well behaved’ stuff, if I say ‘use this utility  function then you can assume it is well behaved’, I will not try to trick  you Consumer allocate income in order to purchase a portfolio of  goods that maximize his/her utility function
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