ECON 102 Lecture Notes - Lecture 3: Intertemporal Choice, Utility, Discounting

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

Document Summary

Lecture 3: macroeconomic choice 1: the social planner. Macroeconomic choice: three methods of choice, tradeoffs in utility: community indifference curves, the social planner"s problem & solution, growth: intertemporal choice. We"ve seen that the speed at which an economy grows is in part a function of the speed at which its resource stock grows. We illustrated this in terms of the quantity of labor. Compared to last class, let"s use some more realistic assumptions: production uses an increasing opportunity cost technology. Means we can"t use simple straight-line ppfs. Suppose only one input (labor) is used. Growth: intertemporal choice: more realistic assumptions, production uses both labor and capital as inputs. We"ll discuss two-input production functions (for a single good) in chapter. 9; for now, don"t worry about the equation for this type of ppf. Utility function: the relationship between consumption and happiness , pleasure ,