ECON 102 Lecture Notes - Lecture 3: Indifference Curve, Intertemporal Choice, Utility

• School: U of M
• Department: Economics
• Course: ECON 102
• Professor: Adam Stevenson

Document Summary

The speed at which the economy grow is in part of function of speed at which its resource stock grows. Illustrated in terms of the quantity of labor. To discuss economic growth, assume that every good produced can be classified as either. Consumption (c) - good purchased by a household for pleasure. Capital (k) - a good purchased, by a firm, as a tool for production. And therefore, how much growth will it experience. Production uses both labor and capital as inputs. Don"t worry about the equation for this ppf until chapter 9. By foregoing consumption today, we buy the possibility of more of everything in the future. The more we give up now, the more we can have laer. The common sense answer: we need to eat. For the economic answer: remember the utility function. Utility function - the relationship between consumption and happiness and. Conceptually measured in fictional units called utils. C = total consumption goods, total happiness.