ECON 1000 Lecture Notes - Indifference Curve, Divisor, Substitute Good

85 views5 pages
tiyana.he18852575513 and 37902 others unlocked
ECON 1000 Full Course Notes
10
ECON 1000 Full Course Notes
Verified Note
10 documents

Document Summary

Consumption possibilities: consumption choices are limited by income and by prices. A household"s budget line describes the limits to its consumption choices. Divisible and indivisible goods: some goods can be bought in any quantity desired. Affordable and unaffordable quantities: it marks the boundary between what is affordable and what is unaffordable. Budget equation: we can describe the budget line by using a budget equation. The budget equation starts with the fact that: Expenditure is equal to the sum of the price of each good multiplied by the quantity bought. Expenditure= (price of pop x quantity of pop) = (price of movie x quantity of movies). Call the price of pop pp the quantity of pop qp, the price of a movie pm, the quantity of movies qm, and income y. We can now write lisa"s budget equation as: Real income: a household"s real income is its income expressed as a quantity of goods that the household can afford to buy.

Get access

Grade+20% off
$8 USD/m$10 USD/m
Billed $96 USD annually
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
40 Verified Answers
Class+
$8 USD/m
Billed $96 USD annually
Class+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
30 Verified Answers

Related Documents

Related Questions