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USC / Economics / ECON 351 / What is utility in economics?

What is utility in economics?

What is utility in economics?

Description

School: University of Southern California
Department: Economics
Course: Microeconomics for Business
Professor: Chad kendall
Term: Fall 2015
Tags: Microeconomics and Economics
Cost: 25
Name: Lecture Notes 5-23
Description: Week 5 - Individual and Market Demand Week 6 - Expected Utility Week 7 - Asymmetric Information 1 Week 8 - Asymmetric Information 2 Week 9 - Game Theory 1 Week 10 - Game Theory 2 Week 11 - Behavioral Economics Week 12 - Labor Supply Week 13 - Production Week 14 - Profit Maximization Week 15 - Firm Supply and Welfare Analysis Week 16 - Government Intervention Week 17 - Wage Inequality W
Uploaded: 08/07/2016
40 Pages 28 Views 3 Unlocks
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"}.lst-kix_t7afce7b0qru-7 > li:before{content:"o "}.lst-kix_2rwucu3dlbb3-5 > li{counter-increment:lst-ctn-kix_2rwucu3dlbb3-5}.lst-kix_t7afce7b0qru-8 > li:before{content:"▪ "}ol.lst-kix_dxczwp4i0fak-1.start{counter-reset:lst-ctn-kix_dxczwp4i0fak-1 0}.lst-kix_slbb49if5qfv-8 > li:before{content:"" counter(lst-ctn-kix_slbb49if5qfv-8,lower-roman) ". "}.lst-kix_ti9n2rk7se2g-5 > li{counter-increment:lst-ctn-kix_ti9n2rk7se2g-5}ol.lst-kix_dxczwp4i0fak-8.start{counter-reset:lst-ctn-kix_dxczwp4i0fak-8 0}.lst-kix_2rwucu3dlbb3-7 > li{counter-increment:lst-ctn-kix_2rwucu3dlbb3-7}.lst-kix_slbb49if5qfv-7 > li:before{content:"" counter(lst-ctn-kix_slbb49if5qfv-7,lower-latin) ". "}ol.lst-kix_2rwucu3dlbb3-7.start{counter-reset:lst-ctn-kix_2rwucu3dlbb3-7 0}.lst-kix_slbb49if5qfv-6 > li:before{content:"" counter(lst-ctn-kix_slbb49if5qfv-6,decimal) ". "}.lst-kix_slbb49if5qfv-3 > li:before{content:"" counter(lst-ctn-kix_slbb49if5qfv-3,decimal) ". "}.lst-kix_slbb49if5qfv-5 > li:before{content:"" counter(lst-ctn-kix_slbb49if5qfv-5,lower-roman) ". "}.lst-kix_slbb49if5qfv-0 > li:before{content:"" counter(lst-ctn-kix_slbb49if5qfv-0,decimal) ".) "}.lst-kix_slbb49if5qfv-4 > li:before{content:"" counter(lst-ctn-kix_slbb49if5qfv-4,lower-latin) ". "}.lst-kix_slbb49if5qfv-1 > li:before{content:"" counter(lst-ctn-kix_slbb49if5qfv-1,lower-latin) ". "}.lst-kix_slbb49if5qfv-2 > li:before{content:"" counter(lst-ctn-kix_slbb49if5qfv-2,lower-roman) ". "}ul.lst-kix_k0tttfdkojsk-6{list-style-type:none}ul.lst-kix_k0tttfdkojsk-7{list-style-type:none}ul.lst-kix_k0tttfdkojsk-4{list-style-type:none}ul.lst-kix_k0tttfdkojsk-5{list-style-type:none}ul.lst-kix_k0tttfdkojsk-2{list-style-type:none}ol.lst-kix_slbb49if5qfv-8{list-style-type:none}ul.lst-kix_k0tttfdkojsk-3{list-style-type:none}ul.lst-kix_k0tttfdkojsk-0{list-style-type:none}ul.lst-kix_k0tttfdkojsk-1{list-style-type:none}.lst-kix_ja5cy75w7jpe-3 > li:before{content:"● "}ol.lst-kix_slbb49if5qfv-4{list-style-type:none}ol.lst-kix_slbb49if5qfv-5{list-style-type:none}ol.lst-kix_dxczwp4i0fak-2.start{counter-reset:lst-ctn-kix_dxczwp4i0fak-2 0}ol.lst-kix_slbb49if5qfv-6{list-style-type:none}.lst-kix_slbb49if5qfv-4 > li{counter-increment:lst-ctn-kix_slbb49if5qfv-4}ol.lst-kix_slbb49if5qfv-7{list-style-type:none}.lst-kix_dxczwp4i0fak-5 > li{counter-increment:lst-ctn-kix_dxczwp4i0fak-5}.lst-kix_ja5cy75w7jpe-4 > li:before{content:"o "}ol.lst-kix_slbb49if5qfv-0{list-style-type:none}.lst-kix_dxczwp4i0fak-2 > li{counter-increment:lst-ctn-kix_dxczwp4i0fak-2}ol.lst-kix_slbb49if5qfv-1{list-style-type:none}ul.lst-kix_k0tttfdkojsk-8{list-style-type:none}ol.lst-kix_slbb49if5qfv-2{list-style-type:none}ol.lst-kix_slbb49if5qfv-3{list-style-type:none}.lst-kix_ja5cy75w7jpe-5 > li:before{content:"▪ "}ul.lst-kix_m26d4sorwm8-8{list-style-type:none}.lst-kix_2rwucu3dlbb3-1 > li{counter-increment:lst-ctn-kix_2rwucu3dlbb3-1}.lst-kix_ja5cy75w7jpe-6 > li:before{content:"● "}.lst-kix_ja5cy75w7jpe-8 > li:before{content:"▪ "}ul.lst-kix_m26d4sorwm8-4{list-style-type:none}ul.lst-kix_m26d4sorwm8-5{list-style-type:none}ul.lst-kix_m26d4sorwm8-6{list-style-type:none}ul.lst-kix_m26d4sorwm8-7{list-style-type:none}.lst-kix_ja5cy75w7jpe-7 > li:before{content:"o "}ul.lst-kix_m26d4sorwm8-0{list-style-type:none}ul.lst-kix_m26d4sorwm8-1{list-style-type:none}ul.lst-kix_m26d4sorwm8-2{list-style-type:none}ul.lst-kix_m26d4sorwm8-3{list-style-type:none}.lst-kix_slbb49if5qfv-0 > li{counter-increment:lst-ctn-kix_slbb49if5qfv-0}.lst-kix_ftxd7mjmuoio-0 > li:before{content:"● "}.lst-kix_q3l3565ghxa4-2 > li:before{content:"▪ "}.lst-kix_dxczwp4i0fak-4 > li{counter-increment:lst-ctn-kix_dxczwp4i0fak-4}.lst-kix_ftxd7mjmuoio-2 > li:before{content:"▪ "}.lst-kix_q3l3565ghxa4-4 > li:before{content:"o "}.lst-kix_ftxd7mjmuoio-6 > li:before{content:"● "}ol.lst-kix_dxczwp4i0fak-0.start{counter-reset:lst-ctn-kix_dxczwp4i0fak-0 0}.lst-kix_ftxd7mjmuoio-4 > li:before{content:"o "}.lst-kix_ftxd7mjmuoio-8 > li:before{content:"▪ "}.lst-kix_k0tttfdkojsk-0 > li:before{content:"⮚ "}.lst-kix_q3l3565ghxa4-0 > li:before{content:"⮚ "}.lst-kix_ja5cy75w7jpe-1 > li:before{content:"o "}.lst-kix_39h04h5k1ozz-0 > li:before{content:"- "}.lst-kix_k0tttfdkojsk-2 > li:before{content:"▪ "}.lst-kix_39h04h5k1ozz-2 > li:before{content:"▪ "}ol.lst-kix_slbb49if5qfv-2.start{counter-reset:lst-ctn-kix_slbb49if5qfv-2 0}.lst-kix_k0tttfdkojsk-6 > li:before{content:"● "}.lst-kix_k0tttfdkojsk-4 > li:before{content:"o "}.lst-kix_39h04h5k1ozz-8 > li:before{content:"▪ "}ol.lst-kix_ti9n2rk7se2g-1.start{counter-reset:lst-ctn-kix_ti9n2rk7se2g-1 0}.lst-kix_ti9n2rk7se2g-7 > li{counter-increment:lst-ctn-kix_ti9n2rk7se2g-7}.lst-kix_39h04h5k1ozz-6 > li:before{content:"● "}.lst-kix_q3l3565ghxa4-6 > li:before{content:"● "}.lst-kix_39h04h5k1ozz-4 > li:before{content:"o "}.lst-kix_dxczwp4i0fak-3 > li{counter-increment:lst-ctn-kix_dxczwp4i0fak-3}.lst-kix_2rwucu3dlbb3-8 > li{counter-increment:lst-ctn-kix_2rwucu3dlbb3-8}.lst-kix_k0tttfdkojsk-8 > li:before{content:"▪ "}.lst-kix_q3l3565ghxa4-8 > li:before{content:"▪ "}ol.lst-kix_slbb49if5qfv-1.start{counter-reset:lst-ctn-kix_slbb49if5qfv-1 0}ul.lst-kix_39h04h5k1ozz-7{list-style-type:none}ul.lst-kix_39h04h5k1ozz-8{list-style-type:none}ul.lst-kix_39h04h5k1ozz-3{list-style-type:none}ul.lst-kix_39h04h5k1ozz-4{list-style-type:none}ol.lst-kix_dxczwp4i0fak-8{list-style-type:none}ul.lst-kix_t7afce7b0qru-8{list-style-type:none}ul.lst-kix_39h04h5k1ozz-5{list-style-type:none}ol.lst-kix_dxczwp4i0fak-7{list-style-type:none}ul.lst-kix_39h04h5k1ozz-6{list-style-type:none}ol.lst-kix_dxczwp4i0fak-6{list-style-type:none}ol.lst-kix_dxczwp4i0fak-5{list-style-type:none}ul.lst-kix_39h04h5k1ozz-0{list-style-type:none}ol.lst-kix_dxczwp4i0fak-4{list-style-type:none}ul.lst-kix_39h04h5k1ozz-1{list-style-type:none}ol.lst-kix_dxczwp4i0fak-3{list-style-type:none}ul.lst-kix_39h04h5k1ozz-2{list-style-type:none}ol.lst-kix_dxczwp4i0fak-2{list-style-type:none}ol.lst-kix_dxczwp4i0fak-1{list-style-type:none}ol.lst-kix_dxczwp4i0fak-0{list-style-type:none}.lst-kix_2rwucu3dlbb3-3 > li{counter-increment:lst-ctn-kix_2rwucu3dlbb3-3}.lst-kix_ti9n2rk7se2g-6 > li{counter-increment:lst-ctn-kix_ti9n2rk7se2g-6}ol.lst-kix_slbb49if5qfv-0.start{counter-reset:lst-ctn-kix_slbb49if5qfv-0 0}.lst-kix_2rwucu3dlbb3-7 > li:before{content:"" counter(lst-ctn-kix_2rwucu3dlbb3-7,lower-latin) ". "}.lst-kix_ti9n2rk7se2g-0 > li{counter-increment:lst-ctn-kix_ti9n2rk7se2g-0}.lst-kix_2rwucu3dlbb3-5 > li:before{content:"" counter(lst-ctn-kix_2rwucu3dlbb3-5,lower-roman) ". "}.lst-kix_2rwucu3dlbb3-3 > li:before{content:"" counter(lst-ctn-kix_2rwucu3dlbb3-3,decimal) ". "}.lst-kix_m26d4sorwm8-7 > li:before{content:"o "}.lst-kix_m26d4sorwm8-5 > li:before{content:"▪ "}.lst-kix_2rwucu3dlbb3-1 > li:before{content:"" counter(lst-ctn-kix_2rwucu3dlbb3-1,lower-latin) ". "}ul.lst-kix_ftxd7mjmuoio-8{list-style-type:none}ul.lst-kix_ftxd7mjmuoio-7{list-style-type:none}ul.lst-kix_ftxd7mjmuoio-6{list-style-type:none}.lst-kix_ti9n2rk7se2g-2 > li{counter-increment:lst-ctn-kix_ti9n2rk7se2g-2}ol.lst-kix_ti9n2rk7se2g-3.start{counter-reset:lst-ctn-kix_ti9n2rk7se2g-3 0}ul.lst-kix_ftxd7mjmuoio-1{list-style-type:none}ul.lst-kix_ftxd7mjmuoio-0{list-style-type:none}.lst-kix_2rwucu3dlbb3-4 > li{counter-increment:lst-ctn-kix_2rwucu3dlbb3-4}ul.lst-kix_ftxd7mjmuoio-5{list-style-type:none}ul.lst-kix_ftxd7mjmuoio-4{list-style-type:none}ul.lst-kix_ftxd7mjmuoio-3{list-style-type:none}ul.lst-kix_ftxd7mjmuoio-2{list-style-type:none}.lst-kix_slbb49if5qfv-5 > li{counter-increment:lst-ctn-kix_slbb49if5qfv-5}ol.lst-kix_2rwucu3dlbb3-5.start{counter-reset:lst-ctn-kix_2rwucu3dlbb3-5 0}.lst-kix_ti9n2rk7se2g-8 > li:before{content:"" counter(lst-ctn-kix_ti9n2rk7se2g-8,lower-roman) ". "}ol.lst-kix_dxczwp4i0fak-4.start{counter-reset:lst-ctn-kix_dxczwp4i0fak-4 0}.lst-kix_ti9n2rk7se2g-7 > li:before{content:"" counter(lst-ctn-kix_ti9n2rk7se2g-7,lower-latin) ". "}ul.lst-kix_t7afce7b0qru-5{list-style-type:none}ul.lst-kix_t7afce7b0qru-4{list-style-type:none}ul.lst-kix_t7afce7b0qru-7{list-style-type:none}ul.lst-kix_t7afce7b0qru-6{list-style-type:none}.lst-kix_ti9n2rk7se2g-2 > li:before{content:"" counter(lst-ctn-kix_ti9n2rk7se2g-2,lower-roman) ". "}ul.lst-kix_t7afce7b0qru-1{list-style-type:none}ul.lst-kix_t7afce7b0qru-0{list-style-type:none}.lst-kix_ti9n2rk7se2g-1 > li:before{content:"" counter(lst-ctn-kix_ti9n2rk7se2g-1,lower-latin) ". "}ul.lst-kix_t7afce7b0qru-3{list-style-type:none}ul.lst-kix_t7afce7b0qru-2{list-style-type:none}ol.lst-kix_2rwucu3dlbb3-7{list-style-type:none}ol.lst-kix_2rwucu3dlbb3-8{list-style-type:none}.lst-kix_ti9n2rk7se2g-4 > li{counter-increment:lst-ctn-kix_ti9n2rk7se2g-4}.lst-kix_ti9n2rk7se2g-3 > li:before{content:"" counter(lst-ctn-kix_ti9n2rk7se2g-3,decimal) ". "}.lst-kix_2rwucu3dlbb3-2 > li{counter-increment:lst-ctn-kix_2rwucu3dlbb3-2}.lst-kix_ti9n2rk7se2g-4 > li:before{content:"" counter(lst-ctn-kix_ti9n2rk7se2g-4,lower-latin) ". "}ol.lst-kix_2rwucu3dlbb3-0{list-style-type:none}ol.lst-kix_2rwucu3dlbb3-1{list-style-type:none}ol.lst-kix_2rwucu3dlbb3-2{list-style-type:none}ol.lst-kix_2rwucu3dlbb3-3{list-style-type:none}.lst-kix_ti9n2rk7se2g-6 > li:before{content:"" counter(lst-ctn-kix_ti9n2rk7se2g-6,decimal) ". "}ol.lst-kix_2rwucu3dlbb3-4{list-style-type:none}ol.lst-kix_2rwucu3dlbb3-5{list-style-type:none}.lst-kix_ti9n2rk7se2g-5 > li:before{content:"" counter(lst-ctn-kix_ti9n2rk7se2g-5,lower-roman) ". "}ol.lst-kix_2rwucu3dlbb3-6{list-style-type:none}.lst-kix_slbb49if5qfv-3 > li{counter-increment:lst-ctn-kix_slbb49if5qfv-3}.lst-kix_p55s4jhojord-0 > li:before{content:"● "}.lst-kix_p55s4jhojord-2 > li:before{content:"▪ "}.lst-kix_p55s4jhojord-3 > li:before{content:"● "}ul.lst-kix_ja5cy75w7jpe-2{list-style-type:none}ul.lst-kix_ja5cy75w7jpe-3{list-style-type:none}ul.lst-kix_ja5cy75w7jpe-0{list-style-type:none}ul.lst-kix_ja5cy75w7jpe-1{list-style-type:none}.lst-kix_p55s4jhojord-1 > li:before{content:"o "}ol.lst-kix_2rwucu3dlbb3-0.start{counter-reset:lst-ctn-kix_2rwucu3dlbb3-0 0}ul.lst-kix_ja5cy75w7jpe-8{list-style-type:none}ol.lst-kix_ti9n2rk7se2g-2.start{counter-reset:lst-ctn-kix_ti9n2rk7se2g-2 0}ol.lst-kix_slbb49if5qfv-4.start{counter-reset:lst-ctn-kix_slbb49if5qfv-4 0}.lst-kix_p55s4jhojord-8 > li:before{content:"▪ "}ul.lst-kix_ja5cy75w7jpe-6{list-style-type:none}ul.lst-kix_ja5cy75w7jpe-7{list-style-type:none}ol.lst-kix_ti9n2rk7se2g-8.start{counter-reset:lst-ctn-kix_ti9n2rk7se2g-8 0}ul.lst-kix_ja5cy75w7jpe-4{list-style-type:none}.lst-kix_dxczwp4i0fak-8 > li{counter-increment:lst-ctn-kix_dxczwp4i0fak-8}ul.lst-kix_ja5cy75w7jpe-5{list-style-type:none}.lst-kix_p55s4jhojord-7 > li:before{content:"o "}ul.lst-kix_q3l3565ghxa4-1{list-style-type:none}.lst-kix_p55s4jhojord-4 > li:before{content:"o "}.lst-kix_p55s4jhojord-6 > li:before{content:"● "}ul.lst-kix_q3l3565ghxa4-0{list-style-type:none}.lst-kix_p55s4jhojord-5 > li:before{content:"▪ "}.lst-kix_slbb49if5qfv-7 > li{counter-increment:lst-ctn-kix_slbb49if5qfv-7}ol.lst-kix_slbb49if5qfv-3.start{counter-reset:lst-ctn-kix_slbb49if5qfv-3 0}ol.lst-kix_2rwucu3dlbb3-6.start{counter-reset:lst-ctn-kix_2rwucu3dlbb3-6 0}ol.lst-kix_dxczwp4i0fak-3.start{counter-reset:lst-ctn-kix_dxczwp4i0fak-3 0}.lst-kix_q3l3565ghxa4-1 > li:before{content:"o "}.lst-kix_ti9n2rk7se2g-8 > li{counter-increment:lst-ctn-kix_ti9n2rk7se2g-8}.lst-kix_q3l3565ghxa4-3 > li:before{content:"● "}.lst-kix_ftxd7mjmuoio-1 > li:before{content:"o "}ol.lst-kix_ti9n2rk7se2g-7.start{counter-reset:lst-ctn-kix_ti9n2rk7se2g-7 0}ul.lst-kix_p55s4jhojord-8{list-style-type:none}ul.lst-kix_p55s4jhojord-6{list-style-type:none}ul.lst-kix_p55s4jhojord-7{list-style-type:none}ul.lst-kix_p55s4jhojord-4{list-style-type:none}ul.lst-kix_p55s4jhojord-5{list-style-type:none}.lst-kix_ftxd7mjmuoio-3 > li:before{content:"● "}.lst-kix_ftxd7mjmuoio-7 > li:before{content:"o "}ul.lst-kix_p55s4jhojord-2{list-style-type:none}.lst-kix_slbb49if5qfv-1 > li{counter-increment:lst-ctn-kix_slbb49if5qfv-1}ul.lst-kix_p55s4jhojord-3{list-style-type:none}ul.lst-kix_p55s4jhojord-0{list-style-type:none}ul.lst-kix_p55s4jhojord-1{list-style-type:none}.lst-kix_ja5cy75w7jpe-2 > li:before{content:"▪ "}.lst-kix_k0tttfdkojsk-1 > li:before{content:"o "}.lst-kix_ftxd7mjmuoio-5 > li:before{content:"▪ "}.lst-kix_2rwucu3dlbb3-0 > li{counter-increment:lst-ctn-kix_2rwucu3dlbb3-0}ol.lst-kix_ti9n2rk7se2g-3{list-style-type:none}ul.lst-kix_q3l3565ghxa4-7{list-style-type:none}.lst-kix_k0tttfdkojsk-3 > li:before{content:"● "}ol.lst-kix_ti9n2rk7se2g-2{list-style-type:none}ul.lst-kix_q3l3565ghxa4-6{list-style-type:none}ol.lst-kix_ti9n2rk7se2g-5{list-style-type:none}ol.lst-kix_ti9n2rk7se2g-4{list-style-type:none}.lst-kix_ja5cy75w7jpe-0 > li:before{content:"- "}ul.lst-kix_q3l3565ghxa4-8{list-style-type:none}ol.lst-kix_ti9n2rk7se2g-7{list-style-type:none}ul.lst-kix_q3l3565ghxa4-3{list-style-type:none}ol.lst-kix_ti9n2rk7se2g-4.start{counter-reset:lst-ctn-kix_ti9n2rk7se2g-4 0}ol.lst-kix_ti9n2rk7se2g-6{list-style-type:none}ul.lst-kix_q3l3565ghxa4-2{list-style-type:none}.lst-kix_39h04h5k1ozz-3 > li:before{content:"● "}ul.lst-kix_q3l3565ghxa4-5{list-style-type:none}ol.lst-kix_ti9n2rk7se2g-8{list-style-type:none}ul.lst-kix_q3l3565ghxa4-4{list-style-type:none}ol.lst-kix_slbb49if5qfv-5.start{counter-reset:lst-ctn-kix_slbb49if5qfv-5 0}.lst-kix_k0tttfdkojsk-5 > li:before{content:"▪ "}ol.lst-kix_ti9n2rk7se2g-1{list-style-type:none}.lst-kix_39h04h5k1ozz-1 > li:before{content:"o "}ol.lst-kix_ti9n2rk7se2g-0{list-style-type:none}.lst-kix_q3l3565ghxa4-7 > li:before{content:"o "}.lst-kix_39h04h5k1ozz-7 > li:before{content:"o "}.lst-kix_q3l3565ghxa4-5 > li:before{content:"▪ "}ol.lst-kix_slbb49if5qfv-8.start{counter-reset:lst-ctn-kix_slbb49if5qfv-8 0}.lst-kix_k0tttfdkojsk-7 > li:before{content:"o "}ol.lst-kix_2rwucu3dlbb3-4.start{counter-reset:lst-ctn-kix_2rwucu3dlbb3-4 0}ol.lst-kix_2rwucu3dlbb3-1.start{counter-reset:lst-ctn-kix_2rwucu3dlbb3-1 0}.lst-kix_39h04h5k1ozz-5 > li:before{content:"▪ "}.lst-kix_dxczwp4i0fak-6 > li{counter-increment:lst-ctn-kix_dxczwp4i0fak-6}.lst-kix_dxczwp4i0fak-1 > li{counter-increment:lst-ctn-kix_dxczwp4i0fak-1}.lst-kix_dxczwp4i0fak-7 > li{counter-increment:lst-ctn-kix_dxczwp4i0fak-7}.lst-kix_ti9n2rk7se2g-0 > li:before{content:"" counter(lst-ctn-kix_ti9n2rk7se2g-0,decimal) ".) "}.lst-kix_slbb49if5qfv-8 > li{counter-increment:lst-ctn-kix_slbb49if5qfv-8}.lst-kix_2rwucu3dlbb3-8 > li:before{content:"" counter(lst-ctn-kix_2rwucu3dlbb3-8,lower-roman) ". "}ol.lst-kix_ti9n2rk7se2g-5.start{counter-reset:lst-ctn-kix_ti9n2rk7se2g-5 0}ol.lst-kix_dxczwp4i0fak-5.start{counter-reset:lst-ctn-kix_dxczwp4i0fak-5 0}.lst-kix_2rwucu3dlbb3-6 > li{counter-increment:lst-ctn-kix_2rwucu3dlbb3-6}ol.lst-kix_2rwucu3dlbb3-3.start{counter-reset:lst-ctn-kix_2rwucu3dlbb3-3 0}ol.lst-kix_slbb49if5qfv-7.start{counter-reset:lst-ctn-kix_slbb49if5qfv-7 0}ol.lst-kix_ti9n2rk7se2g-6.start{counter-reset:lst-ctn-kix_ti9n2rk7se2g-6 0}.lst-kix_slbb49if5qfv-2 > li{counter-increment:lst-ctn-kix_slbb49if5qfv-2}.lst-kix_2rwucu3dlbb3-6 > li:before{content:"" counter(lst-ctn-kix_2rwucu3dlbb3-6,decimal) ". "}.lst-kix_ti9n2rk7se2g-3 > li{counter-increment:lst-ctn-kix_ti9n2rk7se2g-3}.lst-kix_2rwucu3dlbb3-4 > li:before{content:"" counter(lst-ctn-kix_2rwucu3dlbb3-4,lower-latin) ". "}.lst-kix_m26d4sorwm8-8 > li:before{content:"▪ "}ol.lst-kix_dxczwp4i0fak-6.start{counter-reset:lst-ctn-kix_dxczwp4i0fak-6 0}.lst-kix_2rwucu3dlbb3-0 > li:before{content:"" counter(lst-ctn-kix_2rwucu3dlbb3-0,decimal) ".) "}.lst-kix_2rwucu3dlbb3-2 > li:before{content:"" counter(lst-ctn-kix_2rwucu3dlbb3-2,lower-roman) ". "}.lst-kix_m26d4sorwm8-6 > li:before{content:"● "}

Lecture 5: Individual and Market DemandIf you want to learn more check out How are certain ingredients recognized?

Utility

  • is a number representing the level of satisfaction a consumer gets from given basket  higher number means more satisfaction

Utility Function  

  • assigns level of utility for an individual each possible market basket

 For any amount of clothing and food we can assign utility number U (F, C) =FCIf you want to learn more check out How many oxygen atoms are present after the reaction ends
If you want to learn more check out What is the hybridization of as in the asf4- ion?

        Utility curve is similar to indifference curve more satisfaction in higher indifference curves (same info)If you want to learn more check out What type of tissue covers the epiphysis of bones and reduces friction in the joints?

Marginal Utility  is the additional satisfaction obtained from consuming one additional unit of a goodWe also discuss several other topics like What are the different anorexia subtypes?

*Satisfaction is the same on the indifference curveIf you want to learn more check out What is a septum pellucidum?

 change in marginal utility is zero

MRSx,y  =

 = MRSx, y =   =   * Just true at optimal bundary

  >   buy more x and less y

Partial derivative…

u(x, y) = xayb                MUx =  = axa-1yb

                        MUy  =  = bx9yb-1

U (x, y) = ax + by         MUx =  = a

                        MUy =  = b

First Case: Cobb – Douglas

U(x, y) = xayb                a > 0, b > 0

Second Case: Perfect Substitutes

                        U(x,y) = ax + by , a > 0 , b > 0

MRS =   does not hold at optimal bundle

 constant marginal utility and marginal rate of substitution

MRSx,y >                 y* = 0 , x* =  

MRSx,y <                 x* = 0, y* =

MRSx,y =                 any x* and y* such that P*x + PyY = I

Third Case: Perfect Complements

                        u(x, y) = min {ax, by}         a > 0, b > 0

                                        take minimum of both

                        *Take the smaller of the two

Left Shoe

Right Shoe

U (LR)

1

1

1

1

2

1

1

3

1

2

2

2

*MRS x, y is undefined when ax = by

MRSx,y =  =         0 if ax > by

                        00 if ax < by

MUx =         0 if ax  by                        MUy =   0 if by  ax

                A of ax < by                                   b if by < ax

*Optimal Consumption bundle ax = by (at the corner                 )

        Eq. 1                 ax = by

        Eq.2                Px X + PyY = I

X =   Px  + Py Y = I

Y (Px  + Py) = I  Y =

Y*  =                 X* =

Ch. 6: Individual Demand

Individual demand curve relates quantity of a good that a single consumer will buy to its price

  1. Cobb – Douglas

  1. Perfect substitutes

MRSx,y >  , x ●  

  1. Perfect Complements

X2 =  

*All 3 cases have downward sloping demand curve

Amount of good I buy will increase if income increases

        Normal good  quantity demanded increases as income increases

        Inferior good quantity demanded decreases as income increases

Engel curve  relates the quantity of a good consumed to income

        Upward  sloping for normal goods

Substitutes  increase price in one leads to increase of quantity demanded of the other

Complements  increase price of one leads to decrease demanded of the other

Independent  price of good y does not affect good x

Income elasticity of demand  change in the quantity demanded resulting from 1  increase in income

Cross-price elasticity of demand   change in the quantity demanded of one good resulting from 1  increase in price of another

Income effect  price of a good falls so purchasing power goes up

          consumers will tend to buy more of the good that has become cheaper

 Substitution effect is always positive (P  Q )

  • Income effects varies I
  • Normal good Q
  • Inferior good Q
  • Total  effects varies
  • Normal good Q
  • Inferior good Q?

 if Q  then it is a giffen good (PQ)

 is substitution or income effect bigger (which change is bigger)

Giffen good  demand decreases with a price decrease (upward – sloping demand curve)

Market demand curve   curve which relates the quantity of a good that all consumers in a market will buy to its price

Lecture 9: Game Theory I

Game  situation in which players make strategic decisions that take into account each other’s actions and responses

Pay off  value associated with a possible outcome

Strategy rule or plan of action for paying a game

Optimal strategy strategy that maximizes a player’s expected pay off

Best response  optimal action for a player given how their opponents are playing

Simultaneous game  a game in which players all move at the same time

Dominant strategy  strategy that is optimal no matter what an opponent does

Equilibrium in dominant strategies   outcome of a game in which each firm is doing the best it can regardless of what its competitors are doing

Nash equilibrium  each player is playing a best response to how the other player is playing

        Requirements:

  1. Each player is playing a best response to what they believe the other player is going to do
  2. Each player correctly forecasts what other player is going to do.

*An equilibrium in dominant strategies is always a Nash equilibrium, but not vice versa

        DS: I’m doing to  the best I can no matter what you do.

        NE: I’m doing the best I can given what you are doing

Mixed vs Pure Strategy

        Mixed strategy   strategy in which a player makes a random choice among two or more possible actions based on a set of chosen probabilities

        Pure strategy   strategy in which a player moves a specific choice or takes a specific action

          no equilibrium in pure strategies

        50 % as an equilibrium (randomize)

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