Consumer Review - Consumer Theory Pretest Helps (by no...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Consumer Theory Pretest Helps (by no means is this inclusive) Be able to walk around the below circle of life in any direction: Don’t walk into the test without these equations (don’t worry about names) General Elasticity Equation Own Price Slutsky Cross price Slutsky Elasticity Slutsky Cournot Aggregation Engle Aggregation Euler’s Application U=V and E=I
Background image of page 1

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

View Full DocumentRight Arrow Icon
Know your elasticities and what they mean (elasticity can be for about anything, but here are some that show up often) : Name Equation If >0 then: If <0 then: Marsh. Own price i i i i x P P x w w Does not follow law of demand—giffen. Follows the law of demand. Hick. Own Price i i i i h P P h w w This never happens. Always negative. Marsh. Cross Price i j j i x P P x w w Gross Substitutes Gross Complements Hick. Cross price i j j i h P P h w w Net Substitutes Net Compliments Income i i x I I x w w Normal Good Inferior Good Keep strait the difference between “Circle of Life” and “Slutsky World”: 1. Circle of life: a. Here, Hicksian demand does not usually equal Marshallian demand. b.
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 2

Consumer Review - Consumer Theory Pretest Helps (by no...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online