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Lecture 5: Arrow-Debreu Economy

Lecture 5: Arrow-Debreu Economy

Lecture 5: Arrow-Debreu Economy. The following topics are covered: Arrow-Debreu securities Pricing Arrow-Debreu securities Optimal portfolios of Arrow Debreu securities How Arrow-Debreu securities differ framework differs from the standard utility maximization? Implications in asset pricing

By elina
(889 views)

Indifference Curves

Indifference Curves

Indifference Curves. An indifference curve shows a set of consumption bundles among which the individual is indifferent. Quantity of Y. Combinations (X 1 , Y 1 ) and (X 2 , Y 2 ) provide the same level of utility. Y 1. Y 2. U 1. Quantity of X. X 1. X 2. Marginal Rate of Substitution.

By lea
(1350 views)

18.1 OPTIMAL CONTRACT DESIGNED FOR A SINGAL PARTY

18.1 OPTIMAL CONTRACT DESIGNED FOR A SINGAL PARTY

18.1 OPTIMAL CONTRACT DESIGNED FOR A SINGAL PARTY. Profit –maximizing insurance contract with adverse selection ; Imagine a profit maximizing risk – neutral insurance company with monopoly power. An individual which has uncertain amount of money to spend.

By grover
(1361 views)

Consumer Behavior

Consumer Behavior

Chapter 7. Consumer Behavior . Chapter Objectives. Total utility and marginal utility Law of diminishing marginal utility Marginal utility-to-price ratios Deriving the demand curve Income and substitution effects Appendix: the indifference curve model. 7- 2. Utility.

By arne
(326 views)

Demand and Consumer Theory

Demand and Consumer Theory

Demand and Consumer Theory. International Managerial Economics. Introduction. Obviously important for managers to know demand for product Analysis can be difficult –price, income tastes etc… Endogenous and exogenous variables If changes prices needs to know what impact will be: elasticity

By benedict
(180 views)

Consumers’ preferences

Consumers’ preferences

Consumers’ preferences. ECO61 Udayan Roy Fall 2008. Goods bundles. Origin. Preferences . Consumers have preferences that they can use to compare different goods bundles The preferences may be over goods bundles consumed by oneself or over goods bundles consumed by someone else

By azriel
(327 views)

Demand & Utility

Demand & Utility

Demand & Utility. What is Utility?. Satisfaction, happiness, benefit. Cardinal Utility vs. Ordinal Utility. Cardinal Utility : Assigning numerical values to the amount of satisfaction

By argus
(162 views)

Tastes / Preferences

Tastes / Preferences

Tastes / Preferences. Indifference Curves. Rationality in Economics. Rationality Behavioral Postulate : “Rational Economic Man ” The decision-maker chooses the most preferred bundle from the set of available bundles. We must model: Set of available bundles; and

By claudia
(475 views)

3. Demand and Behavior in Markets

3. Demand and Behavior in Markets

3. Demand and Behavior in Markets. assume for now that perfectly competitive markets are given. How they arose will be discussed in part 4. properties of perf. comp. markets: any agent can exchange as much of any good as desired at a fixed given price

By istas
(92 views)

International Trade Models

International Trade Models

International Trade Models. ECN 3860 International Economics. Why Nations Trade. International trade provides us with a variety of goods and services from other countries; International trade promotes specialization and efficiency in production; and

By emerson
(212 views)

Chapter 8

Chapter 8

Chapter 8 . Slutsky Equation. How the optimum moves when the price of a good changes?. Decomposition : the total effect = the substitution effect + the income effect . p139 . The pivot gives the substitution effect , the shift gives

By lyris
(463 views)

Chapter 4 homework

Chapter 4 homework

Chapter 4 homework. Questions 6, 8, and 16. Managerial Economics & Business Strategy. Chapter 4 The Theory of Individual Behavior. Normal Good. Income effect (+) Substitution effect (+) Total effect (+) How Draw??. Clothing. A. C. B. Substitution Effect. Food. Income Effect.

By pilis
(167 views)

Theory of Consumer Behavior

Theory of Consumer Behavior

Theory of Consumer Behavior. Chapter 3. Topics of Discussion. Utility Theory Total Utility (Satisfaction) Marginal Utility Meet Carl or Carla Consumer Law of Diminishing Marginal Utility. Indifference Curves Concept of Isoutility Marginal Rate of Substitution.

By noah
(6 views)

Chapter 6

Chapter 6

Chapter 6. Production. Introduction. Production decisions of a firm are similar to consumer decisions Can also be broken down into three steps: Production Technology Describe how inputs can be transformed into outputs Inputs: land, labor, capital and raw materials

By shelagh
(106 views)

Chapter 3 Consumer Behaviour I --- The Indifference Curve Approach

Chapter 3 Consumer Behaviour I --- The Indifference Curve Approach

Chapter 3 Consumer Behaviour I --- The Indifference Curve Approach. Contents:. Postulates of Consumer Behaviour Good, Bad and Neuter Utility Indifference Curve Properties of Indifference Curves of Two Goods Other Shapes of Indifference Curves Budget Line Consumer Equilibrium.

By jacie
(123 views)

Possibilities, Preferences, and Choices

Possibilities, Preferences, and Choices

8. CHAPTER. Possibilities, Preferences, and Choices. After studying this chapter you will be able to. Describe a household’s budget line and show how it changes when prices or income change

By philomena
(113 views)

The Family as an Economic Unit

The Family as an Economic Unit

The Family as an Economic Unit. The Neoclassical Model of Specialization & Exchange. Basic underlying assumption: The family is a unit whose adult members make informed and rational decisions that maximize the well-being of the family.

By harlan
(310 views)

CHAPTER 3

CHAPTER 3

CHAPTER 3. TOOLS OF NORMATIVE ANALYSIS. Welfare Economics. Criteria for Evaluating Government Policy Welfare Economics – branch of economic theory concerned with the social desirability of alternative economic states. . Welfare Economics.

By gaye
(208 views)

Intermediate Microeconomics

Intermediate Microeconomics

Intermediate Microeconomics. Utility Theory. Utility. A complete set of indifference curves tells us everything we need to know about any individual’s preferences over any set of bundles. However, our goal is to build a model that is useful for describing behavior.

By liseli
(133 views)

Family Utility Maximization

Family Utility Maximization

Family Utility Maximization. The goal of the family is to maximize utility by choosing a combination of home work and market work. Household production. You can cook and eat a steak at home or you can go out to eat a steak. The household production takes time to prepare.

By clea
(162 views)

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