ECN 504- Midterm Exam Guide - Comprehensive Notes for the exam ( 31 pages long!)
5 Oct 2017
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Income is defined as exogenous if its dollar value is unaffected by prices in the economy: as i look around the store, i discover that i can purchase shirts for and pants for. Fall 2017: the end points, or intercepts, of the budget line are determined by the fixed income divided by the price of the good on each axis: 200 divided by. 20 in the case of pants, and 200 divided by 10 in the case of shirts. In our example, the opportunity cost of buying one more pair of pants is the 2 shirts i have to give up. Suppose, for instance, that instead of giving me an additional , my wife had given me a 50% off coupon for shirts and pants. In that case, the real price of a shirt would have dropped to and the real price of pants would have dropped to , which would enable me to buy as many as.
