Please enable JavaScript.
Coggle requires JavaScript to display documents.
Econ (Costs (Measuring Costs, Short Run Costs, Long run Costs, Lower costs…
Econ
-
-
Consumer
Chapter 3: Preferences
Utility Function
The utility function is the relationship between utility measures and every possible bundle of goods
U(x) >= U(z)
U = (q1^a)(q2^[1-a])
Determine preference # Indifference curve
Consist of all those bundles that correspond to a particular utility measure
MRS depends on how much extra utility Lisa gets from a little more of each good
MRS = dq1/dq2 = - (U1/U2)
Marginal Utility
(The marginal utility we get from a little more of one good, holding the other quantity constant)
U1 = change in U / change in q1 = dq1
-
CHAPTER 5: Consumer Welfare and Policy Analysis
How much are consumers helped or harmed by shocks that affect the equilibrium price and quantity?
-
-
Effects of government policies on consumer welfare
(policies change the environment ad alter consumer's budget constraints and thereby affect consumer welfare)
-
Welfare program
food stamps can only be used on food, consumers are potentially worse off if they would find it optimal to consume less food and more other goods than allowed by the program
-
-
-
-