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Unformatted text preview: Final Exam Review for Intermediate Microeconomics Econ 100A (UCSC) March 2009 Econ 100A (UCSC) Optimization Theory 03/09 1 / 11 Consumer Theory We have a utility function: U = x 3 4 y 1 4 We have our budget constraint: m = p x x + p y y How do we solve the optimization problem? Econ 100A (UCSC) Optimization Theory 03/09 2 / 11 Consumer Theory We have a utility function: U = x 3 4 y 1 4 We have our budget constraint: m = p x x + p y y How do we solve the optimization problem? Find the marginal utilities subject to x and y . Econ 100A (UCSC) Optimization Theory 03/09 2 / 11 Consumer Theory We have a utility function: U = x 3 4 y 1 4 We have our budget constraint: m = p x x + p y y How do we solve the optimization problem? Find the marginal utilities subject to x and y . Plug them into the MRS: MRS = & MU x MU y = & U / x U / y Econ 100A (UCSC) Optimization Theory 03/09 2 / 11 Consumer Theory We have a utility function: U = x 3 4 y 1 4 We have our budget constraint: m = p x x + p y y How do we solve the optimization problem? Find the marginal utilities subject to x and y . Plug them into the MRS: MRS = & MU x MU y = & U / x U / y Equate MRS with the slope of the budget line: Econ 100A (UCSC) Optimization Theory 03/09 2 / 11 Consumer Theory...
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This note was uploaded on 09/29/2010 for the course ECON 200 taught by Professor Oprea during the Fall '09 term at UCSC.
 Fall '09
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