{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

ECON10A_14

# ECON10A_14 - Review For Midterm 2 1 A Yes B No C Not sure 2...

This preview shows pages 1–8. Sign up to view the full content.

1/4/2008 1 Review For Midterm 2

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
1/4/2008 2 Are you ready for midterm 2? A. Yes B. No C. Not sure
1/4/2008 3 Utility Maximization max U(x 1 , x 2 ) s.t. p 1 x 1 + p 2 x 2 = I F.O.C.s MU 1 /MU 2 = p 1 /p 2 p 1 x 1 + p 2 x 2 = I X 1 X 2

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
1/4/2008 4 Properties of Goods Income Properties Normal Inferior Price Properties Substitutes Complements Giffen
1/4/2008 5 Comparative Statics – Income and Substitution  Effects A to B is sub effect. Always toward good that has become relatively cheaper B to C is income effect Normal and inferior: These tell whether C is: Left or right of B, for good 1 Below or above B, for good 2 Substitutes, complements, or Giffen. These tell whether C is Left or right of A, for good 1 Below or above A, for good 2 p 1 X 1 X 2 B A C 1 C 2 C 3 C 4

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
1/4/2008 6 Labor - Leisure max U(L e , I) Le, I s.t. wLe + I = I 0 + 168w Tangency Condition: At Le*, I* slope of indif curve = slope of budget line MRS Le, I = w Budget Condition Must be on budget line wL e * + I * = I 0 + 168w L a I 168 L e I 0 I 0 + 168w L e * I *
1/4/2008 7 I 0 sub Wage change: Income and Sub  Effects Suppose w↑

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern