Lecture 8 - ECONOMICS 100A Professor Dan Acland 09/21/10...

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ECONOMICS 100A Professor Dan Acland 09/21/10 Lecture 8 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 ANNOUNCEMENTS Make sure you are getting emails from bSpace. I just sent out an email late last week because, as we began grading problem sets, it became obvious that the no partial-credit policy is not going to work with problems that are as complicated as these. In terms of drawing a graph, there are a bunch of different parts of drawing a graph, and you’re not going to get it exactly right or exactly wrong. So, we will grade with partial credit where appropriate, and GSIs will be doing the grading. There will still be no re-grades. We simply don’t have the resources for that. However, because we’re regarding for partial credit, it will take quite a bit longer. I have posted the solutions to the problem set on bSpace. That will be the same policy for future problem sets. It may take two to three weeks to get them graded and back to you. One thing you may consider for the next problem set is to make a photo-copy of your problem set before you turn it in so you can compare it to the solutions on bSpace instead of having to wait three weeks. Problem Set 2 is due next Tuesday in lecture or before. LECTURE Slide : Lecture outline: 1. Marginal willingness to pay and consumer surplus - Deriving MWTP from an indifference curve. - Computing consumer surplus (net benefit) from MWTP. 2. Marginal willingness to pay versus Demand: the income effect. - Wealth and substitution effects together - A numerical example 3. Marginal willingness to pay versus Marginal willingness to accept - What is MWTA and which measure should we use? - Quasilinear preferences make MWTP, MWTA, and Demand the same. 4. Deadweight loss and substitution effects. - You should listen closely about deadweight loss because we will be spending the rest of the semester talking a lot about DWL. Slide : 1. Marginal willingness to pay and Consumer Surplus. A. Deriving MWTP from an indifference curve. Every year Joe goes camping. There’s a camp store that sells everything except candy bars. Joe leaves home with $110 and stops at a 7/11 along the way to buy ten candy bars at $1 each, leaving him $100 to spend at the camp store. On the first day of camping a bandit comes out of the woods pointing a gun at Joe and says, “I’m going to take one of your candy bars and give you some money in return. How much is one candy bar worth to you? As it
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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 8 - ECONOMICS 100A Professor Dan Acland 09/21/10...

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