Chap10-commented - Krugman and Wells Krugman Chapter 10...

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Krugman Krugman and Wells and Wells Chapter 10 Chapter 10 Steven J. Haider EC201 Spring 2010
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EC201-10-p2 Overview Overview Chapters 3-7 : laid out the basics of the competitive model, including the supply and demand curve Chapter 9: discusses optimal decision This chapter (and chapter 10): shows we get to the demand curve Economists assume that people are rational : we make choices that are optimal for us This assumption can get us along way We are going to skip much of C. 9 and all of C. 10. The material is very important to economics—and a focus of EC301—but it is beyond what we need for EC201.
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EC201-10-p3 Rational Consumers Rational Consumers When we get to the firm side, we assume firms maximize profits On the individual side, we assume consumers maximize utility A measure of satisfaction The utility function tells us how much satisfaction a person gets from a consumption bundle What is the metric? utils In graduate economic theory courses, we use complex
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Chap10-commented - Krugman and Wells Krugman Chapter 10...

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