Consumer choice (L1&2)

Question 1

competitive equilibrium

Answer 1

what consumers want to buy is what producers want to sell

Question 2

nash equilibrium

Answer 2

no one has anything to gain by making a different choice

Question 3

budget line intersects y axis

Answer 3

m/p2

Question 4

budget line intersects x axis

Answer 4

m/p1

Question 5

gradient of budget line

Answer 5

-p1/p2

Question 6

numeraire good

Answer 6

price of good 1 is made 1 by dividing the equation by p1

Question 7

complete preferences

Answer 7

able to compare them

Question 8

how to denote:
weak
indifferent
strict
preferences

Answer 8

> _ (weak)
~ (indifferent)
(strictly prefer)
if you strictly prefer a bundle you also weakly prefer it
if you’re indifferent, you weakly prefer both bundles

Question 9

preference assumptions

Answer 9

completeness
transitivity
monotonicity
convex
continuity
lexicographic

Question 10

transitivity

Answer 10

you can tell what’s the better bundle

Question 11

monotonicity

Answer 11

more is better

Question 12

convexity

Answer 12

if indifferent, you weakly prefer a mix
find the weighted average by drawing a line between bundles

Question 13

continuity

Answer 13

boundary included
eg x1+x2<_ 3

Question 14

lexicographic

Answer 14

if X1=Y1 but x2>y2 then the first bundle is preferred

Question 15

MRS

Answer 15

how many units of X2 will I give up for 1 unit of X1