Microeconomics

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  • Created by: cerys
  • Created on: 29-11-14 14:54
Consumer Theory
Consumers choose best bundle they can afford
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Budget Constraint (BC)
PxX + PyY < M
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Budget Set (BS)
All (X,Y) that satisfy BC (BC become PxX + Y = M)
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Budget Line (BL)
PxX + PyY = M
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BL Slope
-Px/Py
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BL Vertical Intercept
M/Py
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BL Horizontal Intercept
M/Px
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Slope of BL
Measures how many of y must be given up to gain more of x
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Increasing M
Parallel shift outwards
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Increasing Px
Makes BL steeper
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Increasing Py
Makes BL flatter
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Multiply by t
Does not change the BL
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Per Unit Quantity Tax
p + t
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Value Tax (ad valorem)
p (1+ t)
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Per Unit Subsidy
p - s
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Value Subsidy
p (1-s)
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Other cards in this set

Card 2

Front

PxX + PyY < M

Back

Budget Constraint (BC)

Card 3

Front

All (X,Y) that satisfy BC (BC become PxX + Y = M)

Back

Preview of the back of card 3

Card 4

Front

PxX + PyY = M

Back

Preview of the back of card 4

Card 5

Front

-Px/Py

Back

Preview of the back of card 5
View more cards

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