Macroeconomics Exam Review 51

Macroeconomics Exam Review 51 - 3. Assume is locally...

Info iconThis preview shows page 1. Sign up to view the full content.

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

Unformatted text preview: 3. Assume is locally nonsatiated. Then, for every x , there exists some y such that y x . Therefore, there is no best element. 1.234 Assume otherwise, that is assume that x x for every x ( p , ) but that =1 < . Let = =1 be the unspent income. Spending the residual on good 1, the commodity bundle x = x + 1 e 1 is affordable =1 = =1 + 1 1 = Moreover, since x x , x x , which contradicts the assumption that x is the best element in ( p , ). 1.235 Assume otherwise, that is assume that x x for every x ( p , ) but that =1 < . This implies that x int ( p , ). Therefore, there exists a neigh- borhood of x with ( p , ). Within this neighborhood, there exists some)....
View Full Document

This note was uploaded on 01/16/2012 for the course ECO 2024 taught by Professor Dr.dumond during the Fall '10 term at FSU.

Ask a homework question - tutors are online