Unformatted text preview: budgets to work on. All buyers will try to maximize their utility, that is, make themselves as happy as possible, by spending what money they have in the best way possible. By considering both their preferences and their budget, they ensure that they end up with the best combination of goods possible. Because the household is such a small unit, no household has a significant impact on the market, and so the actions of any single household is its best effort to react to the market price and the goods available. In this unit on demand, we will learn how to work with graphical and mathematical models for demand, we will observe how changes in price or income can affect demand, we will see how consumers make choices under uncertainty, and we will apply that knowledge to calculate the optimal purchases an individual consumer can make, given their income and the prices of goods....
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- Fall '08