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Theory Of Consumer Price (4 properties of Indefference Curve (Higher IC…
Theory Of Consumer Price
Budget Constraint= What consumer can afford
sloping down
indefference Curve
Marginal rate Of Subtitution (MRS)
amount of one good to give up to get other
4 properties of Indefference Curve
Higher IC are prefered to LOWER ONES
IC are DOWNWARD SLOPING
IC do NOT CROSS
IC are BOWED INWARD
2 extreme examples of IC
Perfectt Subtitutues
2 goods with straight-line IC
The MRS is Fixed Number
Perfect complements
2 goods with Right-Angle IC
consumer Choices
Normal Good
Buy goods ^ when Income increase
Inferior Good
Less Buy Good when Income Decrease
Change in Price
Income Effect
IC change to Higher or Lower
Substitution Effect
Move along IC
Giffen Goods
Interest Rate