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101-2011-L7

# 101-2011-L7 - Econ 101 Lecture 7 Consumption and Leisure...

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Unformatted text preview: Econ 101 Lecture 7 Consumption and Leisure Decisions Announcements n Hand in PS2 after the class n Midterm exam is on Wednesday, April 27 n Chapters 1, 2 (pages 39-59), 3, 4 (pages 102-123) n Multiple choice n I will post a few sample questions on the web today Optimal Choice n Basic result n Willingness to substitute l for c is equal to (market) ability to substitute l for C n Price of l (in terms of C ) is equal to the value of l (in terms of C ) MRS l,C = w Comparative Statics n Now we have a laboratory for consumer behavior: we can ask our model questions by running “ experiments ” n What happens if we change dividends or taxes? n What happens if we change the wage rate? n These “experiments” are called comparative statics exercises: we compare two different equilibria after changing something and leaving everything else constant. Always ask yourself: n What am I changing?...
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101-2011-L7 - Econ 101 Lecture 7 Consumption and Leisure...

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