ECO204Y1 Lecture Notes - Lecture 2: Utility, Marginal Utility, Demand Curve
Document Summary
Will focus on goods available in market and assume consumers are price takers. Amount of goods physically available for consumption i. e. cannot buy 1. 3 fries from mcdonald"s. Assume all goods are available for purchase in any amount. Boundary bundle: positive amount of one good, zero of the other good. Consumer choice given by bundle that maximizes happiness, given budget constraint. X can equally y, but does not have to. Must have opinion, be able to rank: transitive preference. If a b and b c, then a c: x y if and only in u(x)>u(y) Back out from demand curve: estimate. Can determine preferences using partial derivatives and see relationship between increasing quantity of each type of good: increasing or decreasing mu depends on second derivative.
