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This 4 page Class Notes was uploaded by Sidney Hong on Wednesday November 4, 2015. The Class Notes belongs to ECO 106 at Pace University taught by Cesar Castope in Fall 2015. Since its upload, it has received 9 views. For similar materials see Principles of Economics: Macroeconomics in Economcs at Pace University.
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Date Created: 11/04/15
Fall 2015 Principles of Economics Micro ECOlO6 CRN 72490 MondayWednesday 900 AM 1025 AM Professor Cesar Castope 1026 Chapter 7 Utility Utility Theory 0 The measurement of utility and satisfaction through the marginal addition subtraction of utils 0 Satisfactionutility is limited by 0 Choice 0 Income 0 Price 0 Measured through the context of 0 Fixed budget constraint 0 2 goods 0 Measured illustrated through a budget line 0 All income must be spent 0 Combination of purchase of goods 0 Opportunity cost considered Budget Line Diagram Days of skiing per semester 0 l 2 3 4 6 Days of horseback riding per semester Total and Marginal Utility Utils Tntal Utility 35 51339 25 213quot 15 113 5 1 2 s 4 5 5 7 HillEntity Marginal Utility 1 2 s 4 5 E 79 Q titv antenatald Utility MKll lZ tl MUy MU e MU U P P I J P P y Ill MU If 2 buy mere X If 1 buy more Effects on Utility 0 Substitution 0 As the quantity of good A increases the marginal utility of good A Will decrease and the quantity demanded of good B Will increase 0 Income Budget Censtraint 50quot 4 Eudget after changes 30quot 20quot 1s lUnsiginal Budget ID 15 EU 25 Hamburgers Days of slkiing per semester i Ms Bain maximizes 39 utility given her budget constraint at point X skiing 2 i 7 days and spending 3 days imrseback riding g V Curve C i 2 3 4 5 6 Days Of horseback riding per semester
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