ECO 1302 Lecture Notes - Lecture 9: Marginal Utility, Budget Constraint, Perfect Competition
2 Mar 2018
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The assumption that households possess a knowledge of the qualities and prices of everything available in the market and that firms have all available information concerning wage rates, capital costs, technology, and output prices. An industry in which there are many firms, each being small relative to the industry and producing virtually identical products, and in which no firm is large enough to have any control over prices. Undifferentiated outputs; products that are identical to or indistinguishable from one another. The price of other products in the market. The household"s expe(cid:272)tatio(cid:374)s a(cid:271)out i(cid:374)(cid:272)o(cid:373)e, wealth, a(cid:374)d pri(cid:272)es. The limits imposed on household choices by income, wealth, and product prices. The set of options that is defined and limited by budget constraints. Within the constraints imposed by limited incomes and fixed prices, households are free to choose what they will and will not buy.
