Chapter_5_appendix

Chapter_5_appendix - Demand Demand Appendix: Appendix: ConsumerChoice BudgetConstraint Appendix TheBudgetConstraint FIGURE 9A-3 Daves Budget

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Demand Demand
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Appendix: Graphical Representation of  Appendix: Graphical Representation of  Consumer Choice Consumer Choice Budget Constraint Need to find out the different consumption  bundles that would use up the budget. 
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Appendix FIGURE 9A-3 Dave’s Budget Constraint The Budget Constraint
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Budget Constraint Budget Constraint Mathematical Representation:  e.g., P pizza =$2, P coke =$1, budget $10 Budget constraint: 2X + 1Y = 10  More generally: P x X + P y Y = I P x : Price of X P y : Price of Y I: Income available to spend on the two goods.    What happens if the price of one good  changes?
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Appendix FIGURE 9A-5 How a Price Decrease Affects the Budget Constraint How a Price Change Affects Optimal  Consumption
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Consumer Preference Consumer Preference Indifference curve   A curve that shows the  combinations of consumption bundles that give the  consumer the same utility.
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2 2 A Indifference Curve Indifference Curve B 1 4 C 1 D 5 E coke Pizza Indifference Curve
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This note was uploaded on 04/28/2011 for the course ECON 1 taught by Professor Tang during the Spring '08 term at UCSD.

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Chapter_5_appendix - Demand Demand Appendix: Appendix: ConsumerChoice BudgetConstraint Appendix TheBudgetConstraint FIGURE 9A-3 Daves Budget

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