ECO204Y1 Lecture Notes - Lecture 4: Slutsky Equation, Marginal Utility, Quasilinear Utility
Document Summary
Nicholson & snyder: p. 145-164, 167-168, 173-174, 187-192. Key terms: make sure you know definition, example, context and purpose for each of the following. Individual demand function: aggregate demand function, ordinary and giffen goods, engel curve, normal goods, inferior goods, luxuries, necessities. Income elasticity, own-price elasticity, cross-price elasticity: compensated and uncompensated demand, hicksian decomposition of a price change. Others are challenging and open-ended and give you opportunity to think deeply and creatively. Often, problems require additional assumptions that are not explicitly stated. Learning to make additional assumptions is a large part of learning to do economics. In some cases there will be more than one correct answer, depending on what assumptions you made. Thus, in answering problems you should always spell out your reasoning very carefully. This is particularly important in true or false problems, where the quality of your explanations will usually matter far more than your conclusion. To solidify your understanding: 1, 2, 3, 5b, 6, 10, 14.
