ECON 2400 Lecture Notes - Lecture 9: Competitive Equilibrium, Utility, Normal Good
7 Jan 2018
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Nx = nfp = ca = 0: economic agents: consumers, rms, and a government, income-expenditure identity y = c + g. perfectly. A closed-economy one-period macroeconomic model one-period model no dynamic decisions, s = i = 0: closed economy no international trade, Competitive markets everyone acts as a price-taker. maximization (consumption-leisure tradeo ) optimal labor supply and goods demand a representative rm"s pro t maximization optimal labor. In this chapter, we study a representative consumer"s constrained utility demand and output supply. Preferences the representative consumer"s preferences over leisure and consumption goods are captured by the utility function. C is the quantity of consumption. l is the quantity of leisure (any time spent not working in the market). A consumption bundle: a combination of c and l. Ap/econ2400a (fall 2016) w. ho notes on chapter 4 4 three properties of consumer"s preferences: 1. The consumer likes diversity in his or her consumption bundle.
