1
Assume only two goods available (x and y=composite good)
Price of x: Px
Price of y: Py
Income: I
Total expenditure o bas et ( , ) PxX + PyY
ota e pe d tu e on basket (X,Y):
The basket is affordable if total expenditure does not
exceed total income:
Px X
Chapter Four Overview
1.
1.The
TheBudget
BudgetConstraint
Constraint
2.
2.Consumer
ConsumerChoice
Choice
3.
3.Duality
Duality
1
Key Definitions
Assume only two goods available: X and Y
Price of x: Px Price of y: Py Income: I
Budget
Constraint: The set of
INTERMEDIATE MICROECONOMIC THEORY I
ECONOMICS 2150a-001
Department of Economics
Western University
I. Trela
September 2015
Office: 4081 SSC
Phone: (519) 661-2111 ext. 85054
E-mail: itrela@uwo.ca
Class: T 12:30-2:30, Th 12:30-1:30 Classroom: T: NCB 113; TH