ECON 301 Study Guide - Final Guide: Giffen Good, Deadweight Loss, Fixed Cost

• School: Concordia University
• Department: Economics
• Course: ECON 301
• Professor: Liva Aramaic Mallissa

Document Summary

Transitive: x is better than y, which is bettter thsn z, so x > z. Complete: given bundles, a consumer can rank them. Reflexive: any bundle is at least as preferred as itself. Strictly convex: a combo of x1 and x2 are better than only x or only x2. Marginal product: change in output from one more unit of input. Change in input / change in output. Cobb-douglas utility function: strictly monotonic production function in which the good are neither necessity nor luxury goods. Looks like this: u(x1, x2) = x1^a * x2^b. Curves are c-shaped and never touch x or y axis. Expenditure share on both goods is constant. Perfect substitutes: one good can be exchanged for the other. Looks like this: u(x1,x2) = (x1 + x2) Perfect compliments: only consumed in a certain combination. Looks like this: u(x, y) = min{x, y}