, UNIT 3
Scarcity Wellbeing
:
,
and
Working Hours
Hours in a year
:
8760
6600 hours of free time =
2160 work hours
One
year
=
50 working weeks : Typical work week = =
43 Hours
utility happiness
=
or use
* Extra note *
Indifference curves
Slope =
Marginal Rate of substitution
Quantitys-
↳
↓
Product The amount of one good you'd be willing
Y
give
2-
to
up one more unit of the other .
⑥
Convex :
decreasing MRS
! 2 Quantity Product X
RRS Y :
Give up 3 units Y for 1 unit X
Higher indifference curve (further
away from origin) implies higher utility
maximise
Aim is to
utility thus we want to be on a higher indifference curve .
Limit
money
=
Budget Constraint
Nominal income : amount of cash that one has
Real income Based
The amount
actually buy
: :
on
you can .
1) Income
Py
2) Price of product X
3) Price of product"
Qy
=
money Q
Scarcity Wellbeing
:
,
and
Working Hours
Hours in a year
:
8760
6600 hours of free time =
2160 work hours
One
year
=
50 working weeks : Typical work week = =
43 Hours
utility happiness
=
or use
* Extra note *
Indifference curves
Slope =
Marginal Rate of substitution
Quantitys-
↳
↓
Product The amount of one good you'd be willing
Y
give
2-
to
up one more unit of the other .
⑥
Convex :
decreasing MRS
! 2 Quantity Product X
RRS Y :
Give up 3 units Y for 1 unit X
Higher indifference curve (further
away from origin) implies higher utility
maximise
Aim is to
utility thus we want to be on a higher indifference curve .
Limit
money
=
Budget Constraint
Nominal income : amount of cash that one has
Real income Based
The amount
actually buy
: :
on
you can .
1) Income
Py
2) Price of product X
3) Price of product"
Qy
=
money Q
