FHCE 3150 Chapter Notes - Chapter 3: Retirement Planning, Indifference Curve, Speed Dating

• School: University of Georgia
• Department: Financial Planning, Housing and Consumer Economics
• Course: FHCE 3150
• Professor: Babiarz

Document Summary

Chapter 3: rational consumer choice marketplace with well-defined preferences (actually know what they want) goods (product or service) Budget limitation exactly exhaust the consumers income at given prices. Bundle a particular combination of two or more. Budget constraint the set of all bundles that. The slope of a line is (cid:498)rise(cid:499) over (cid:498)run(cid:499) Slope of budget line is the negative of the price. Shows the strength of incentive when dealing with. Affordable (feasible) set bundles on or below the. Bundles for which the required expenditure at ratio of the two goods consumer choice. Affordable vs. unaffordable budget constraint given prices is less than or equal to the income available outside the budget constraint. Budget line must satisfy the following equation: (px)*x + (py)*y = m. Px = price of one good x = good. Py = price of other good y = good. Only one good changes slope of budget constraint changes proportion budget constraint shifts parallel to original one.