The Theory of Consumer Choice (Optimization (The Consumer's optimal…
The Theory of Consumer Choice
The Budget Constraint
The slope of budget constraint
Higher indifference curves are preferred to lower ones.
Indifference curves are downward sloping.
Indifference curves do not cross.
Indifference curves are bowed inward.
Marginal rate of substitution (MRS)
Two extreme examples
The Consumer's optimal choices
MRS = Relative price at the optimum
The same slope at the optimum
The effect of an increase in Income
The effect of a price change
Rotate the budget constraint
Income and Substitution effects
Huge in substitute goods
Tiny in complement goods
Deriving the Demand curve
Wages and Labor supply
Interest rate and Saving
Vietnam-Netherlands Programme - 2017
Do Huu Luat