EC 201- Midterm Exam Guide - Comprehensive Notes for the exam ( 62 pages long!)
Document Summary
Economics 201 lecture 1 notes - preferences. The choices you make as a buyer of goods and services are influenced by many factors: consumption possibilities are limited by income and price. Some goods are divisible and must be bought in whole units at the points marked. The budget line is a constraint on consumption choices: can afford any point on the budget line or inside. The consumption bundle of a sausage pizza and two beers is feasible (+++ =) The consumption bundle of two bundles of tiramisu and two sodas is feasible. (+++ = ) The consumption bundle of a cheese pizza, cheesy bread, and two beers is not feasible. (+++ = ) Preferences: the choice that people make depend on preferences likes and dislikes, benefit or satisfaction from consuming a good or service is called utility. I(cid:374)di(cid:448)idual(cid:859)s (cid:373)a(cid:454)i(cid:373)izi(cid:374)g utilit(cid:455: fir(cid:373)(cid:859)s (cid:373)a(cid:454)i(cid:373)izing profit, utility is an abstract concept = happiness = satisfaction.