ECON100A_9

# ECON100A_9 - Decomposingpricechanges p2 Pick initial...

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1/4/2008 1 Decomposing price changes p 2 Pick initial optimum A Draw new budget line Draw parallel budget line Pick point B Draw indif curve through A and B (This gives sub effect) Figure out where to put C X 1 X 2 B A

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1/4/2008 2 Question 1 p 2 Good 2 inferior Where is the optimum consumption bundle after the price change? 1. C 1 2. C 2 3. C 3 X 1 X 2 B A C 1 C 2 C 3
1/4/2008 3 Question 2 p 2 Goods 1 and 2 subs Good 1 normal Where is the optimum consumption bundle after the price change? 1. C 1 2. C 2 3. C 3 X 1 X 2 B A C 1 C 2 C 3

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1/4/2008 4 Aggregation
1/4/2008 5 Individual vs. Market Demand 7 15 X 1 P 1 Fred

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1/4/2008 6 Market Demand: Question 1 X 1 P 1 7 15 7 20 Fred George X 1 P 1 What is Market Demand when P 1 =7?
1/4/2008 7 Market Demand X 1 P 1 7 15 7 20 Fred George X 1 P 1 X 1 P 7 35 Market What is Market Demand when P 1 =7?

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1/4/2008 8 Market for Factors of Production Market for Finished Goods HOUSEHOLDS FIRMS DEMAND (for Goods \$ \$ \$ \$ SUPPLY (of Factors of Prod) CIRCULAR FLOW DIAGRAM
1/4/2008 9 SUPPLY OF FACTORS OF  PRODUCTION Labor

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10 Question 1 A doctor earns \$150/hr. He wants to take off from work and go see a movie that will last 2 hours. The ticket costs \$8. How many dollars worth of other consumption must he give up to see the movie? A. None
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## This note was uploaded on 12/04/2010 for the course ECON 100A taught by Professor Babcock during the Fall '07 term at UCSB.

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ECON100A_9 - Decomposingpricechanges p2 Pick initial...

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