Learning Objectives
230 words
1 min read
Visual companion
Python
Type and operator map
Python Week 1: the first filter for runtime behavior
View
Revision summary
What this note is really saying
Short form
# Learning Objectives - Apply utility theory to explain consumer choice - Use indifference curves and budget constraints - Derive individual and market demand - Week 1: Demand, supply, equilibrium - Basic marginal analysis ## 1. Utility Theory & Consumer Choice **Intuition:** Consumers allocate limited income to max...
Learning Objectives
- Apply utility theory to explain consumer choice
- Use indifference curves and budget constraints
- Derive individual and market demand
- Week 1: Demand, supply, equilibrium
- Basic marginal analysis
1. Utility Theory & Consumer Choice
Intuition: Consumers allocate limited income to maximize satisfaction. Each additional unit provides less extra satisfaction (diminishing marginal utility).
Consumer Equilibrium:
Worked Example: Sam has 5/slice, soda 16.
2. Indifference Curves & Budget Constraints
Indifference Curve: All combinations giving equal satisfaction. Properties: Downward sloping, convex to origin, higher = better, never cross.
Budget Line: PxX + PyY = I, Slope = -Px/Py
Equilibrium: Tangency where MRSxy = Px/Py.
3. From Individual to Market Demand
Market demand = horizontal sum of individual demands.
| Concept | Formula | Notes |
|---|---|---|
| Budget Line | PxX + PyY = I | Slope = -Px/Py |
| Consumer Equilibrium | MUx/Px = MUy/Py | Equal marginal utility per rupee |
| MRS | MRSxy = MUx/MUy | Slope of indifference curve |
Q1: MUx=20, MUy=10, Px=5, Py=2. Maximizing utility?MUx/Px=4, MUy/Py=5. Not equal - consume less X, more Y. Q2: Income=100, Px=10, Py=5. Budget line?10X+5Y=100, or Y=20-2X. Slope=-2. Q3: What does convex indifference curve imply?Diminishing MRS - as X increases, willingness to trade Y for X decreases. Join Discord PreviousFoundations & Demand/SupplyNextProduction & Cost Analysis