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Summary Micro-Economie 3.2

Course
- Micro-Economie 3.2
- Björn Brügemann
- 2015 - 2016
- Vrije Universiteit Amsterdam
- Economie en Bedrijfseconomie
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A snapshot of the summary - Micro-Economie 3.2

  • Consumer choice

  • 3 assumptions about consumer preferences are:
    completeness
    transivity
    reflexivity
  • What does an indifference curve show?
    a set of consumption bundles about which the individual is indifferent
  • What is a Cobb-Douglas utility function
    U(x,y)=x^ay^b
  • What does a straight Indifference curve say about the substitution
    That means that the good is easily substituable
  • What does a convex indifference curve mean
    That means that the good is more complementary
  • Utility maximization

  • What is a budget constraint?
    A curve that describes the entire set of consumption bundles a consumer can purchase when spending all income
  • What are the 3 assumptions about the budget constraint?
    1. each good has a fixed price and the consumer can buy as much of the good as he wants as long as he has the income to pay for it

    2. The consumer has a fixed income to spend

    3. the consumer can not save of borrow
  • What is a feasible bundle?
    The bundles under the budgetconstraint, that are the bundles the consumer can afford.
  • What is the slope of the budgetconstraint?
    -Px/Py
  • How can you maximize the utilization?
    MRS=Px/Py
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