Micro Economics If
Term 1
,E-BudgetSets
choice
Theory of consumer Theory of
=
"Can afford" Budget sets "best"
>
-
->
preferences
·
consumption sets and bundles - 2
goods infinitely divisible
,
RIJ- set of 2
+
Pede
(x x) P,,
= M
x e
>de
=
,
amount potential m
PM
↑ ↑
of bundles
amount of good B
>
goodIt
set
- slope =
-it
Budget > x
relative price of goods
,
,
- ,
2
opportunity cost
prices &
B =
fxtR : P ,
x
,
+
Pe = M
↓
Income
income
of good I m
:
P: price
p C + Pete
, M
Pc price of good
, =
: 2
, -
x2
=-
-
x Tax x:
charge an
ad-valorem
% of units
8
tux
suppose p, t so
of 2 bought
above
Pi =
P, 50
(P1x, + PeREM)
xz
If
-
·
x :
suppose my so
A
P, , + Pe =M
·
· Pr
Ff , :
-
·
m' = M
budget PT P (I + El(x -
+
increase
,
in , .
,
·
+
PeEM
line with
gradient
incl
same
-
per unit tax :
p, =
P .
+ Y
* P +
p (I +)x-
ad-valorem
=
p (1
.
/P.
: =
. + so :
P (1 + 2)
P (1 + 2)x
.
taxes Pi
,
Lump
+ =
Sum : m = m -
T
.
=
P (H +
. +(x ,
-
PECT m + PT , ,
, p
+
m +
Budget line gets
.
FfC =
,
0 x
,
=
!
·
P(1 + 1)
sleeper when tax
= m +
p ,
ECT ,
= m(1 + 4) kicks in
-
Pi
= Vorchers
t specific amount
M
↳ a
gov
F
-r
gives to a
consumer which
- only be spent
not affordable may on one
bundles when good Consider roucher worth
cosed
,
a
is im
tax v = o for good,
73)
non-linear
approach
,
M
↳ similar to
↑P
i ,
- taxes
P
Term 1
,E-BudgetSets
choice
Theory of consumer Theory of
=
"Can afford" Budget sets "best"
>
-
->
preferences
·
consumption sets and bundles - 2
goods infinitely divisible
,
RIJ- set of 2
+
Pede
(x x) P,,
= M
x e
>de
=
,
amount potential m
PM
↑ ↑
of bundles
amount of good B
>
goodIt
set
- slope =
-it
Budget > x
relative price of goods
,
,
- ,
2
opportunity cost
prices &
B =
fxtR : P ,
x
,
+
Pe = M
↓
Income
income
of good I m
:
P: price
p C + Pete
, M
Pc price of good
, =
: 2
, -
x2
=-
-
x Tax x:
charge an
ad-valorem
% of units
8
tux
suppose p, t so
of 2 bought
above
Pi =
P, 50
(P1x, + PeREM)
xz
If
-
·
x :
suppose my so
A
P, , + Pe =M
·
· Pr
Ff , :
-
·
m' = M
budget PT P (I + El(x -
+
increase
,
in , .
,
·
+
PeEM
line with
gradient
incl
same
-
per unit tax :
p, =
P .
+ Y
* P +
p (I +)x-
ad-valorem
=
p (1
.
/P.
: =
. + so :
P (1 + 2)
P (1 + 2)x
.
taxes Pi
,
Lump
+ =
Sum : m = m -
T
.
=
P (H +
. +(x ,
-
PECT m + PT , ,
, p
+
m +
Budget line gets
.
FfC =
,
0 x
,
=
!
·
P(1 + 1)
sleeper when tax
= m +
p ,
ECT ,
= m(1 + 4) kicks in
-
Pi
= Vorchers
t specific amount
M
↳ a
gov
F
-r
gives to a
consumer which
- only be spent
not affordable may on one
bundles when good Consider roucher worth
cosed
,
a
is im
tax v = o for good,
73)
non-linear
approach
,
M
↳ similar to
↑P
i ,
- taxes
P
