February-29

February-29 - ECON203Notes 23:59 ApplicationsandExtensions

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
ECON 203 Notes  23:59 Applications and Extensions  Introduction of new products  iPods  Higher relative MU/Price Shift in consumption pattern  New products succeed by enchaining total utility  Diamond-Water Paradox  Why do “essential” goods have much lower prices than relatively “unimportant” goods? P_W < P_D Water in great supply. Diamonds rare.  MU of last unit of water in low, TU water is high. MU of last unit of diamonds high, TU Diamonds is low.  Water has much more TU than Diamonds is low.  Water has much more TU than Diamonds even through the P_W < P_D MU of water (low)  P of water (low)  Opportunity Cost and Time Cost of the next best alternative forgone  Consumption and production take time  Labor/leisure trade-off Cost of search  Opportunity cot of forgone income Hourly wage 
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Baseball game. Movie, golf, travel, vacation What is the true economic cost? Other Applications 
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 03/22/2012 for the course ECON 203 taught by Professor Al-sabea during the Spring '05 term at USC.

Page1 / 5

February-29 - ECON203Notes 23:59 ApplicationsandExtensions

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online