9-14-10 - 91410 Exam Likeoldexamformat Calculator...

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9-14-10 Exam Like old exam format Calculator Listen to recording Don’t have to simplify everything like square root of 39 for example Can write directly on the exam Both mathematical and conceptional and graphical Don’t worry about MRT (not a big deal) About 6 questions individually weighed See sample practice key Solutions to chpt 4 and 5 are online Some of problems are in back of book if not posted  Arrive by 3:25 S8 o Chooses pt d bc highest happiness on IC o First 100 dollars given for food they will use food stamps  o Opportunity cost of using food stamps is 0 bc not allowed to spend on anything  but food o Op cost of 100 dollars is 100 bc you can use it on anything o Budget line I sflast 0-100 bc giving up nothing 
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o Beyond 100 dollars of food we go down the budget line bc now spending dollars  that could be spent on other goods o Budget set is light blue plus the green  o At e the MRS won’t be equal to budget o MRS is actually steeper than zero but less steep than another one o if gave person 100 in cash rather than food stamps it’s a shift from the first line to  the line where f is including the dashed portion o consumer would rather have $100 in cash than food stamps o so WHY give food stamps when could be happier in getting 100 dollars in cash to ensure it is used for food why do they care to make sure they consume this particular good rather  than other goods? Bc if they don’t consume they might be in worse health and if they  get sick and have to get care, these ppl can’t afford health svc and  now the cost of health care falls on tax payers Lower cost to society to give them food stamps and not cash Another reason is to subsidize farmers S10 – Labor Supply o Leisure – any time you don’t work for money In class is leisure by economist definition Anything you’re not compensated for time (sleeping studying exercising  etc) o If not leisure it is WORK work generates income Allows you to buy stuff
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