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Micro Economics - Spring > Consumer theory > Flashcards

Consumer theory Flashcards

1
Q

What is a budget constraint?

A

The combinations of goods a consumer can afford given their income and prices

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2
Q

What is the formula for a budget constraint?

A

PxX + PyY = i

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3
Q

What is the Marginal Rate of Substitution (MRS) formula?

A

MRS = MUx/MUy

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4
Q

What condition defines utility maximisation?

A

MRS = Px / Py

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Micro Economics - Spring (14 decks)

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