Econ212+Spring2013+Le_Linh+Notes_for_Week_01

5 the numeraire the numeraire price is the price

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Unformatted text preview: the change in the consumption of good 2 (which has to be a decrease) à༎ slope of the budget line. Negative sign means Δx1 and Δx2 always have opposite signs, in order to satisfy the budget constraint. - Measure the opportunity cost of consuming good 1 (giving up the opportunity to consume good 2 is the true economic cost of more good 1 consumption) 2.4. How the budget line changes a) Change in income Increase income à༎ parallel shift outward of the line, and vice versa. b) Change in prices Other cases considered. 2.5. The Numeraire The numeraire price is the pri...
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This note was uploaded on 02/25/2014 for the course ECON 212 taught by Professor Mirobins during the Spring '08 term at Mt. Holyoke.

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