ECON201 Chapter Notes - Chapter 1-4: Composite Good, Cardinal Utility, Mincome

• School: University of Waterloo
• Department: Economics
• Course: ECON201
• Professor: Ryan George

Document Summary

1. 2 optimization and equilibrium two frameworks to describe human behaviour with consumption and such: optimization principle- people try to choose the best patterns of consumption that they can afford. To get the best or optimal choice we have fixed preferences or rankings of outcomes. And we do not pay attention to the following things. & choices change with different environments and times equilibrium principle - prices adjust until the amount that people demand of something is equal to the amount that is supplied. Equilibrium in s&d. comparative statics -> comparing points of equi to examine markets. Many people in the market with relatively same rp then smooth slop down, like figure 1. 2 page 6, cz more people will buy at lower prices. Cz market is so big the jumps on figure 1. 1 don"t even matter in demand curve as it shows the total quantity relative to the price.