cheat sheet Econ-final

cheat sheet Econ-final - Directly reveled ≥ Indirectly...

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Unformatted text preview: Directly reveled +≥+ Indirectly revealed (transitivity) +≥+ WARP : If (,) is directly reveled preferred to (, and two bundles are not the same, then it cannot happen that ( is directly reveled preferred to (,). Violation row t, column s contains same number that row s, column t, does. (If y-bundle is affordable when x-bundle is purchased, then when y-bundle is purchased, the x-bundle must not be affordable) How to find:1. Find the actual cost and the cost at the same price with the bundles you didn’t choose. 2. Draw a chart, circle the actual cost, and put *next to the cost lower than actual cost. 3. Draw another chart, used instead of*, 4. See if violates) WARP is a necessary, but not a sufficient condition for behavior to be consistent with utility max SARP : either directly or indirectly. Transitivity. It is a necessary and sufficient. Paasche quantity: = , if >1 better off at t; if <1 bundle ,) was not affordable, but doesn’t say ranking, Laspeyres quantity := <1, better off at b than t. P price : = <1, doesn’t say anything (different price) But if P>M () better in year b L price : =<M, better off in year t. Full indexation: the rate of increase for wages is the same as the rate of increase in the price index strictly better off Direct Preference revelation: X>d Y; Indirect X>I Z Welfare=> provides a way to add together different consumers’ utilities. An allocation specifies the amt (amts) of a certain good (gds) consumed by each individual . Majority voting : not transitive social preference ordering, outcome depends on the order, violates WARP Rank-order (borda count ),is a single winner election method in which voters rank candidates in order of pref. low score coins, can be manipulated by introducing new alternatives Social decision mechanism : (1)given any set of indiv prf that r complete, reflex, n transitive, the social decision mechanism should result in a social preference that is comp, reflex, n transitive. (2) if all individuals ranks x before y then so should the social pref. (3) social pref bt x n y shld depend only on indivi pref bt x & y, no one else method for aggregating individual pref into one social pref. satisfies 1,2, 3, dictatorship (not desirable) otherwise, have to give up(there is no ideal way to aggregate indiv. Pref. into social pref.) only a dictatorship would avoid inconsistencies. Public good : A good that must be provided in the same amount to all the affected consumers. Same amount, value differently Private good : same amount, value it differently Net Utility : each person cares both about the level of the public good, and the amount that he has to contribute to it. Restriction : be single-peaked,( social pref revealed by majority vote will never exhibit intransitivity...
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This note was uploaded on 02/29/2012 for the course ENGLISH 110 taught by Professor John during the Fall '10 term at Maryland.

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cheat sheet Econ-final - Directly reveled ≥ Indirectly...

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