Economics 2152A/B Lecture Notes - Lecture 3: Emoji, Royal Society Of Literature, Indifference Curve

• School: Western University
• Department: Economics
• Course: Economics 2152A/B
• Professor: Wenya Wang

Document Summary

This course introduces you several models, thus important to distinguish different environments for each model. The representative consumer: stand-in for all consumers in the economy, = all consumers make the same decision, for most macroeconomic questions, stand-in fine. In real world, consumers act differently: questions such as inequality, social security and aging etc require heterogeneous consumers. The rep. consumer derives utility from consuming a consumption bundle (c, l): consumption goods, c, leisure, l. Utility function describes the preferences on consumption. Utility function bundles: u(c, l) (c1, l1) strictly preferred (relative to (c2, l2)) if (c2, l2) strictly preferred to (c1, l1) if, u (c1, l1) > u (c2, l2, u (c1, l1) < u (c2, l2) Indifferent b/w (c1, l1) and (c2, l2) if: u (c1, l1) = u (c2, l2) Exercise: find a pair of consumption bundles in table 1 and describe whether one is strictly preferred, one is strictly preferred to, or the two are indifferent.