Economics 2150A/B Lecture Notes - Budget Constraint, International Polar Year, Indifference Curve
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ECON 2150A/B Full Course Notes
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Consumer enjoys consuming x and y but only if for every 3 units of x, they consume 7 units of y. Should switch the constants to make the totals equal. (7x, 3y) (7(3),3(7)) (21,21) U2 does not represent the same, by power of and negative. U3 does represent the same, because there are 2 negative components. Budget constraint (bc) is the set of affordable bundles given prices and income. Budget line set of all bundles the consumer can purchase, while spending all his income. Graphing budget line, i = pxx + pyy. I = 12 px = 2 py = 1. Change in i, won"t change the slope, it shifts the budget line instead. Change in px or py, will change the slope and 1 or both the intercepts. Special case: px, py change by the same percentage, then the slope doesn"t change. Leads to a shift in the budget line only. Constraint: budget constraint, which included income and prices.