This is a summary of Intermediate Microeconomics with calclus first edition for EOR students. This summary covers the essentials of Chapters: 2-6,8,9,14-16,19-26,28,29,32. It may have a couple references to the book itself, but without the book the summary will be enough. It covers the definitions ...
SOLUTIONS MANUAL for Intermediate Microeconomics with Calculus: A Modern Approach: Media Update 1st Edition by Hal R. Varian ISBN 9780393690033. (Complete Download)
oplossingen Intermediate Microeconomics (Hal R. Varian) 7th edition (excersises are mostly the same as in the 8th edition)
All for this textbook (3)
Written for
Rijksuniversiteit Groningen (RuG)
Econometrics and Operations Research
Microeconomics
All documents for this subject (1)
2
reviews
By: amberbruggink • 2 year ago
By: buwarsaid6 • 4 year ago
By: Bramdejong01 • 4 year ago
Translated by Google
This summary is for ERA and not for economics
Seller
Follow
Bramdejong01
Reviews received
Content preview
Intermediate Microeconomics with calculus for EOR
2 Budget constraint
Composite good is everything else the consumer wants to consume other than good 1. The slope of
a budget line is -p1 / p2. The slope measures the opportunity cost of consuming good 1. When you set
one of the prices on a budget set at 1, we call that price the numeraire price. A lumpsum tax or
subsidy is a fixed amount of money that is paid in once, not in small amounts. On page 28-30 are
some examples of budget lines, when food stamps or rationing is implanted in society.
Three assumptions about preferences: 1) Reflexive, any bundle is at least as good as itself.
2) Transitive, if X is at least as good as Y and Y is at least as good as Z then X is at least as good as Z.
3) Complete, any two bundles can be compared. Indifference curves cannot cross. Two goods are
perfect substitutes if the consumer is willing to substitute one good for the other in a constant rate.
Perfect complements are goods that are always used together, so they need each other to be used.
A bad is a commodity that the consumer doesn’t like. Neutral good is if the consumer doesn’t care
about it. Sometimes we consider the satiation, this is the best bundle for the customer, the closer he
gets the better of he is. A discrete good is a good that is only available in integer amounts.
Well-behaved indifference curves: more is always better, when good and not bad. Monotonicity of
preferences, more is always better. There are: Convex, nonconvex and concave preferences. With
convex: averages are better than extremes. With concave: extremes are better than averages. The
Marginal Rate of Substitution (MRS) is the slope of an indifference curve and is equal to the slope of
the budget line -p1 / p2. One also says marginal willingness to pay.
4 Utility
Cardinal utility; Believes your utility is expressible by a number. A monotonic transformation is an
transformation of an utility function, e.g. multiplication by 2. MRS = - MU 1 / MU2.
Examples of utility functions:
Perfect substitutes: because the customer doesn’t have a preference general it’s: u(x 1,x2) = ax1 + bx2.
It doesn’t assign a higher label to one bundle and it is constant along the indifference curve. The
slope is general -a / b.
Perfect complements: this is the right shoe-left shoe case. u(x 1,x2) = min{11,10} = 10. So the general
form is u(x1,x2) = min{ax1,bx2}.
Quasilinear: the indifference curves are vertically shifted up or down. The general form looks like
this: u(x1,x2) = v(x1) + x2, where x2 is linear but v(x1) can be ln(x1) so this can be nonlinear.
Cobb-Douglas: u(x1,x2) = x1c * x2d . The demand functions are as follow:
5 Choice
The optimal choice lies on the budget line and is the tangent line of the
indifference curve, and is the furthest away from the origin. A discrete good is only available in
integers. A concave preference has an optimal bundle on one of the axes. A perfect substitution
preference has almost always an optimal bundle on one of the axes.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Bramdejong01. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $3.79. You're not tied to anything after your purchase.
