Lecture 4 - ECONOMICS 100A Professor Dan Acland 09/07/10...

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ECONOMICS 100A Professor Dan Acland 09/07/10 Lecture 4 ASUC Lecture Notes Online is the only authorized note-taking service at UC Berkeley. Do not share, copy, or illegally distribute (electronically or otherwise) these notes. Our student-run program depends on your individual subscription for its continued existence. These notes are copyrighted by the University of California and are for your personal use only. D O N O T C O P Y Sharing or copying these notes is illegal and could end note taking for this course. ICLICKER QUIZ There is a different quiz format: matching. I will give you two minutes to look at the setup and write down your answers, and then I will give you fifteen seconds to actually record your answer with your iClicker. (5 minutes for quiz) ANNOUNCEMENTS The GSIs have gone back to handing out the handouts after the quiz because I figured out that the handouts can help you with the quiz. While the handouts are being passed out, I’d like to move on. On Thursday, I administered a survey regarding the participation certificates. I thought it was only fair that I share the results of the survey with you. Most people thought they were annoying, unfair, and didn’t make them more likely to volunteer. Overall, most people do not want to have the participation certificates, so I won’t do them anymore. LECTURE Slide: iClicker problem: William and the polio pandemic Setup: 1) William has preferences over dollars of consumption for himself, and units of polio vaccine for public health programs in Africa. 2) As a young man, William makes a decent income as a computer programmer. 3) One day he is asked to make a donation to a program that provides vaccine to fight polio in Africa. He declines. His total expenditure on polio prevention in Africa is zero. 4) Over the years, William becomes successful in business and his income increases substantially. The inflation-adjusted price of vaccine, however, does not change. 5) One day William is asked to make a donation to the same anti-polio program. He agrees, making a total donation of several billion dollars. Question 1: Do we know whether William’s preferences changed as he got older? 1. Yes 2. No Question 2: Assuming that William’s preferences didn’t change as he gold older, could his preferences be quasi-linear? 1. Yes 2. No Question 3: Assuming that William’s preferences did not change as he got older, could is preferences be homothetic? 1. Yes 2. No We’re going to talk all about the MRS today. I hope it isn’t surprising to you that all five topics of my lecture today are about MRS. We talked about it briefly last time and defined it. And what you may have noticed in the book is that everything Tom Nechyba has to say about all these different types of preferences is defined in terms of MRS and how it changes from one place to another.
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ECONOMICS 100A ASUC Lecture Notes Online: Approved by the UC Board of Regents 9/07/10 D O N O T C O P Y Sharing or copying these notes is illegal and could end note taking for this course. 2
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This note was uploaded on 02/06/2012 for the course ECON 100A taught by Professor Woroch during the Fall '08 term at University of California, Berkeley.

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Lecture 4 - ECONOMICS 100A Professor Dan Acland 09/07/10...

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