Lecture 1 Flashcards
1
Q
What is the Budget Constraint
A
2
Q
Draw the budget constraint.
Draw a higher income
Draw a fall in price P1
A
3
Q
What are the three assumptions of preferences
What are the three assumptions of preferences
A
4
Q
Can indifference curves intersect?
Can indifference curves intersect?
A
5
Q
What is the MRS and how is it calculated?
What is the MRS and how is it calculated?
A
6
Q
How do Pareto efficiency and the MRS interact?
A
1 No need for cardinal information, no need to know agent’s utility levels. Only MRS
2 Prices as allocation mechanism reaching effiiency.
3 Prices as effcient allocation mechanism.
7
Q
Draw an Edgeworth box
A
8
Q
What is the definition of a social welfare function?
A
