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Chapter 2

Chapter 2. Consumers and Their Preferences. Figure 2.1 The Consumption Possibility Set. Figure 2.2 A Convex Set. Figure 2.3 The Economically Feasible Consumption Set: Time Constraints. Figure 2.4 The Economically Feasibly Consumption Set: Income Constraints.

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Chapter 2

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  1. Chapter 2 Consumers and Their Preferences

  2. Figure 2.1 The Consumption Possibility Set

  3. Figure 2.2 A Convex Set

  4. Figure 2.3 The Economically Feasible Consumption Set: Time Constraints

  5. Figure 2.4 The Economically Feasibly Consumption Set: Income Constraints

  6. Figure 2.5 Lexicographic Preferences

  7. Figure 2.6 Nonsatiated Preferences

  8. Figure 2.7 Indifference Curves

  9. Figure 2.8 Indifference Curves Cannot Slope Upward

  10. Figure 2.9 Indifference Curves Cannot Cross Each Other

  11. Figure 2.10 Indifference Curves Farther from the Origin Represent Higher Utility Levels

  12. Figure 2.11(a)

  13. Figure 2.11(b)

  14. Figure 2.12 Convex Preferences and the Marginal Rate of Substitution

  15. Figure 2.13(a) – Flat Indifference Curves

  16. Figure 2.13(b) – Perfect Substitutes Grey Goose Vodka Kettle One Vodka

  17. Figure 2.13(c) – Perfect Complements Nuts Bolts

  18. Figure 2.13(d) – Non Convex Preferences Heroin CD’s

  19. Figure 2.15 The Optimal Consumption Bundle Economically Feasible

  20. Figure 2.17 Study for Final Exams

  21. Optimal Bundle – Example Two Goods: Xylophones (x) and Yams (y) Px = 3; Py = 4; I = 100; U(x,y) = x * y Mux = DU/Dx = [U(x + Dx, y) - U(x, y)] / [(x + Dx) – x] = y Muy = DU/Dy = [U(x, y + Dy) - U(x, y)] / [(y + Dy) – y] = x MRSyx = Dy/Dx = [Dy * DU] / [Dx * DU] = Mux / Muy = y/x Optimal Bundle: MRSyx = Px/Py Px * X + Py * Y = I X = 16.67; Y = 12.50 U = 16.67 * 12.50 = 208.33

  22. Good Health Example

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