Topic 11 - Buying and selling Flashcards
1
Q
Endowment
A
(w1, w2) goods a consumer already has. An endowment with higher value is always preferred to one with a lower value.
2
Q
Gross demands
A
The amount the consumer wants to consumer. Positive consumption quantities
3
Q
Net demand
A
What the consumer buys or sells. (x1-w1,x2-w2) Minus endowment. This can be negative or positive.
4
Q
Net buyer
A
If (x1-w1) > 0 then net buyer (net demander)
5
Q
Net seller
A
If (x1-w1)< 0 then net seller or net supplier.
6
Q
Decrease in endowment
A
If endowment decreases then there is less money from income from new endowment. Demand for good 1 falls if it is normal.
7
Q
Increase in endowment
A
More money income from new endowment. Demand for good 1 rises if it is normal.