Chapter 3-5 Summary PDF

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I I S: Chapter 3: Chapter 4 : Chapter 3. 1 preferences 4 1. Demand curves s I. consumer surplus completeness / solreusing - I deriving graphically - transitivity - action derivingfrom utility maximization - more is better sit P q , +Reg - Mas M19 92) 52 equivalent variation EV , ,. utility 1 compensating variation Cu 3 2. solution 9 = D(p 12.. 3). MARSHALLAN 92 DelP > DEMANDS (grapning) Pr , indifference curves = graph - , - uncompensated marginal utility (mu) Income effects cakulateusinga 4 2 demands -. - - marginal rate of substitution (mrs) - income elasticities different utility functions Wa, 9) engel curves - - I decomposing income/substitution effect pet substituee 4 3. the graphically -show cobb-douglas - find hicksian demands using Expenditure minimization problem quasi-linear constant elasticty of substitution minPiq +PzGe , St.. 4191 92) I , = 9 , 92 (P u) Budget constraint 94 Hp /HICSIAN = P 33.., , : DEMANDS 9 M Pe i) (graphing).. in 3 Pa +R compensated demand , = - , curve transformation (micT) Expenditure function marginal rate - of solve the expenditure - 3. 4 utility maximization E(P R a) p H(P R 5) PeH(P = +.. Pe a) , using graphs , ,, solve , , , - - solve using calculus Sheppard's Lemmen Slutsky equation  Satan I ↑ q: cobbdouglass / / I solve givn nichsions give price change shartrat solve for expenditure 9 = (π()" 92 - 91 = Wa 9) 949: /i) " ( ) I , 9 = evaluate Su/anc , : - use to dnd a Fa Ge giDiSea = min P9 , Pete siL 949 = I u()" , * 99." : U qi = La : 4-Jx9,9 = 0 Ra P-X(I-d) a 9 L = : = 0 I : 9 9: = ( ) = i ai = T() - 5 HP 1 P , i) = qi = ( )" if < = 0 25. Hilp , R , 5) = (2) 25 (5) 6 H2(PP2 5). = , ai = (t ) i) /when & = = Hi = " : H, = ) & solve for optimal budhe ① perfectants / issues / 0 3 Hickson Calculate the following I ② illustrate I a graph show one good that is dendch inferior and one is normal Prit double & ↑, of good S show the inc/sub effect prob & P= /Y = = label which good inferior is I cycu/detitions ⑦ ul) asts student ta calmlet - i calculate an iadject ncome/graph Consumer Cares about 2 goods "z u(c n) , = c = let Pc = 1 WH = PeC H = T - 2 T = 16 w(i - e) = PcC wi = Pc + we find Dc (Pc , w , T] Pe(Pe , w Th , 0 ① O & U(9 92) 39 292 Ula 9) min/39 292] = =.. ,. , Y = 20 4 = 4 P S = y 304 34 = , = = 4 ·i withthese preferences we know 39,: 292 so 9 : = 392 combing with our budget 30 39, + 492 = choose 30 = 3592 + 492 n9 = 5 30 692 = 92 = 59 , = 55 = - - wa 9) 9" = , Findthe demads q2 t 15 74 13 12 I 10 9 8 7 6 5 12345678910/ N 15 9, R B  95 e 1 P = 3 I p = b Y = 3 13 ! / = 2 E. " income ↑ 8 7 ⑤ Ba Bi D - E · substi ↑ a ⑧ SI I2 12345648910/ 14 15 9, 12 15 9 94 99 - - ↑ exect income substitution effect  it s ia 13 " E E ↑ inconfect substitution 5 effecti ↳ 9 S I >I - 2 Bi 9, 9 & ⑧ ⑧ ---- substitution incorrect · effect  y E(P 254 , Pz = 0 9,. , , - I = Ps = E2 6. 754 - I y - z(P , P2 , u) R2 pi = R = Y - s a) 2) e if < = 0 25. Hi(p R 5) = + 3 , , - 6 25 H2(PP2 5) (5). = , if < 43 - = & now calculate the expenditure function ECP P2 ) piH = Patte if & = 0. 25 then EIP Pain) = up) P()., , , , * =pl)" + = 4 p** - (f) (c) z] , + ELP P2n) = 1. 7545p , = ))"( + Pe] - (4) (ic] - " Elp., p , u) = ) (c)" (b) 5 if < = 0 25. Hilp , R , 5) = (2) - 6 25 H2(PP2 5) (5). = , if & = 0. 25 then EIP Pain) , = up) ElPi , Pain 1 - = 4** p** * 3 C z(Pi P 12 k 3) n(s)(10) (12) 160 95 = = 1 = = = = = ,. , orginal income y = F(P , = 5 , P2 = 15 , n = 8) = 44(8)(5)"45)* = 160 [V = 095 Consumer is worse off. (b) ** if < = 3 ) - ult Ls) = (2) if < Y Elp ) (c)" = , p , u) = - /3)() 3(z)"Tp "p *3 = , 1y 4/3 ". 9 3 + CV = z(Pi = 12 , P = 13 , 4 = 9) = 3(z). 12 13 = 215 2. orginal income 2/3 * 9 1/3 y = F(P , = 8 , P2 = 16 , n = 9) = 3(z). 8-1 = 216 CV = -07 Consumer is better off.