Textbook Notes (368,800)
Canada (162,168)
Economics (385)
ECO209Y5 (3)
Fiag (2)
Chapter 9

chapter 9 notes

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Department
Economics
Course
ECO209Y5
Professor
Fiag
Semester
Winter

Description
Chapter 9 notes: Consumer: Current Budget Constraint: C + Sp = w (h-l) + pie T Future Budget Constraint: C = w(h l) + pie T + (1+r) Sp Lifetime Budget Constraint: C + C1+r = w(h-l) + pie T + (w(h-l) + pie T1+r) 3 Assumptions : MRS ( C, l) = w MRS ( C,l) = w MRS ( C, C) = 1+r (price of current consumption relative to future consumption) If w increases, Ns(labour supplied) increases ( substitution > income) If r increases, Ns increases ( intertemporal effect on leisure, i.e, increase in r increases the prices of current leisure relative to future leisure, therefore one leisures les
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