Lecture 24 - Economics 101A (Lecture 24) Stefano DellaVigna...

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Economics 101A (Lecture 24) Stefano DellaVigna November 24, 2009
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Outline 1. General Equilibrium: Introduction 2. Edgeworth Box: Pure Exchange 3. Barter 4. Walrasian Equilibrium
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1 General Equilibrium: Introduction So far, we looked at consumers Demand for goods Choice of leisure and work Choice of risky activities We also looked at producers: Production in perfectly competitive f rm Production in monopoly Production in oligopoly
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We also combined consumers and producers: Supply Demand Market equilibrium Partial equilibrium: one good at a time General equilibrium: Demand and supply for all goods! supply of young worker = wage of experi- enced workers? minimum wage = e f ect on higher earners? steel tari f = e f ect on car price
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2E d g e w o r t h B o x : P u r e E x c h a n g e Nicholson, Ch. 13, pp. 441-444, 476-478 (Ch. 12, pp. 335—338, 369—370, 9th) 2 consumers in economy: i =1 , 2 2goods , x 1 ,x 2 Endowment of consumer i, good j : ω i j Total endowment: ( ω 1 2 )=( ω 1 1 + ω 2 1 1 2 + ω 2 2 ) No production here. With production (as in book), ( ω 1 2 ) are optimally produced
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Edgeworth box Draw preferences of agent 1 Draw preferences of agent 2
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This note was uploaded on 09/02/2010 for the course ECON 101a taught by Professor Staff during the Fall '08 term at Berkeley.

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Lecture 24 - Economics 101A (Lecture 24) Stefano DellaVigna...

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