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19 -- Part 4: The Logic of Individual Choice:

- People buy things to impress others.
- How would it fit into the decision-making?

What implications would such actions have?

- The issue of decision making in worth more to a poor person than a rich person is discussed in this textbook.

How would you design income tax people to make decisions?

- The world would be different if 2.

- You can assign a measure of utility to your studies.

- George Stigler explains from a mined diamond just by looking at it.
- The famous British economist Phillip Wicksteed will have more brilliance and fewer places to live.
- He loved fresh farm eggs more than a mined diamond.

- Given these two b.

- Although the share of Americans who say they are very that bears his name hasn't changed much in the last five decades, the selling of wine right after prohibition has.

- Give an example of a recent purchase where you used a bottle on one and a bottle on the other.
- He let you make your own decisions.
- Did your people ask which one they wanted?

- Even though they were the same wine, most wanted the 10-cent bottle.

- Economic experiments show that people prefer a certain thing.

- Answers to Margin Questions 1.
- The marginal has increased if the total utility curve is straight.
- The utility curve will be flat with a slope of zero since the principle of rational choice.

- The rational choice is to 9.
- It depends on how you watch CNN, since it gives the higher mar pret bounded rationality.
- It can be interpreted within a cost ginal utility per hour.

- When the mar principle of rational choice is used, you are maximizing total utility since there is no reason to be ginal utilities per dollar for all goods.
- You can be zero if it's interpreted in a way that doesn't mean marginal utility is a costly decision-making environment.

- I will reduce my consumption of a good if the price goes up.
- Information does not increase the consumption of other goods.

- The income effect and substitution good are the two effects that will increase consumption.
- A change in tastes will cause a change in the demand curve.
- I would choose tity consumed without a change in the good's substitute labor for leisure since the price of leisure price, if offered one more dollar per hour.

- She can get 10 bars if she spends it all on chocolate bars.
- We have two numbers that are unnecessary and I would use them anyway.

- The line is her budget.
- She lives on two things.

- To see that it is, you have to buy all of her for 50 cents.
- He is trying to get money on chocolate bars.
- She decided to buy a lot of pleasure because of her resources.
- That gives her $1 to spend on tively expressed, she is trying to maximize her utility, since those cans cost 50 cents each, given a budget constraint.

- Don't mention any specific amount of utility.

- The $10 can be used to buy something.
- The line intersects the chocolate-bars axis at 10 and the Graphing the Budget Constraint cans-of-soda axis at 20.

- To be sure that you have it, ask yourself how you can translate the budget constraint into Gra $4 to spend on the two goods.
- Asking what reasoning would lead you to the conclusion that the bud happen if she spends $10 on chocolate bars or all get constraint will shift to the right so that it will intersect on cans of soda is the easiest way to do that.
- You need to explain why.

- You can get a Graphing the Indifference Curve set of combinations of chocolate bars and cans of soda if you continue our thought experiment.

- You can plot the combinations of points on the can.

- Let's ask her if she knew about the one where she was indifferent.

- You had 10 late bars.

- That doesn't sound right, it's bowed inward.

- Let's look at an example.

- The slope of that curve is the absolute value.

- The "prefer-more-to-less" principle would be violated.

- There are 7 cans of soda and 9 chocolate bars in the house.

- Two indifference curves cannot intersect because of cans of soda Latin.
- We drew the group of indiffer ence curves so that they don't intersect.

- You can start with different combinations of goods.
- You can get Combining Indifference Curves in Figure A19-3 if you do that.
- Budget Constraints happiness is represented by each curve.
- If she's on Curve II, the budget constraint and indifference are better off than if she's on Curve I, and if she's on Curve III, the budget constraint and indifference are even better off.
- If she has $10, she will buy cans of soda, even if they are not good.

- Curves in Figure A19-3 can be used to see if you followed the reasoning.

- They're indifference curves.

- That looks like a good point.

- The reasoning is the same for all points.

- We arrived at the same con clusion we found in the chapter, only this time we did it without using actual numbers.

- When without a Utilometer, economists' principle of rationalSophie started with $10 and chose to buy 8 cans of soda, is internally logical.

- She buys 8 cans of soda for 50 cents.

- Say the price of a can of soda goes to $1.
- The principle of rational choice rotates the budget line in from budget line 1 to budget line with indifference curve/budget line analysis.
- She can't buy as much as she can demand.
- We can figure out how much she'll buy.
- The quantity of a good is the same as the reasoning we used before.
- A son will be bought at various prices.
- The relative price of a good and the point of her new budget line are given by the lower indifference curve.
- The price/quantity axis in Figure A19-6(b) shows the curve of soda demand from the indifference curves and budget at $1 each.
- Con thought experiments asking how many cans of soda are in each can, and you can see we're getting aSophie to buy at various prices.
- The downward-sloping demand curve is the law of one of those experiments.

- She'd have to be com changes to continue the analysis for a couple of additional price required by the substitution effect.
- You will see that the demand curve you derive will correspond to a rise in price and a fall in it.

- Let's make a deal.
- You tenta, there's more we can do with indifference, I think that all kinds of stuff can be curves.
- Income effects and substitution can be seen with indifference curves and budget constraints.
- To be as well off as before, and to experience in the intermediate microeconomics courses.

- $5 is enough to buy video games and a.
- The budget constraint would be hot dogs.

What is the rate of substitution of hot dogs?

- The price of hot dogs would fall to 50 cents.

If the mar drew the new budget constraint, what would the indifference curve look like?

- The indifference curves are shown in a graph.

- Discuss how strategic reasoning is used to solve games.

- They are looking at some women and discussing their strategy to meet them.
- Nash tells his friends that if they were to approach the problem on their own, they might all go for the blonde.

- No one gets the blonde if everyone competes for her.
- We all go for her friends.
- No one likes to be second choice so they give us the cold shoulder.
- We don't insult the other girls and we don't get in each other's way.
- That is the only way to win.
- That's the only way to get a girl.

- Nash's eureka moment is when each person acting in his or her own best interest will not necessarily arrive at the best of all possible outcomes.
- Adam Smith is wrong.

- When interdependent decisions are involved, the decision makers' strategy needs to be considered.
- The study of interdependent decision-making processes is central to modern economics.

- Game theory is more than just a tool used by economists.
- Game theory is being used more and more by all social scientists as a tool of analysis.
- Political scientists and sociologists can discuss war strategy and social relationships in game theoretic terms.
- The underlying model of the social sciences is game theory.

- Modern economics is becoming more and more dependent on game theory, which is inconsistent with supply and demand in many cases.

- Graduate students studying microeconomics spend more time learning game theory than they do learning supply and demand models.

- Game theory has become so important because it is a flexible tool that can be applied to many situations without making the restrictive assumptions of the supply/ demand model.

- The film's reasoning can be questioned.
- The filmmakers didn't care about it being wrong because it made for a better scene.

- I think that when you learn a model, it's hard to make it fit in real-world situations.
- Economists are constantly tweaking existing models and developing new models to help us understand real-world problems and issues.
- Game theory offers a new set of models that can be used to approach economic issues.
- Game theory models are more flexible than standard economic models because they can be tailored to fit the problem.

- The individual game theory models are not as broad as the standard models.
- A different game theory model is needed for each situation and set of assumptions.
- In game theory, there are many models that have multiple equilibrium solutions.
- Game theory is a framework rather than a finished set of models for understanding real-world events.

- Four students with A averages had partied the night before the exam and slept through it.
- Since they were "A" students, and the professor liked them, they decided to make up a sad story and convince her that they should be allowed to take the exam late.
- They went to the professor apologetically, explaining how they intended to come to the exam, but when they got back from visiting a sick brother, they had a flat tire.
- They were late for the exam because it took them five hours to get the flat fixed.
- It wasn't the best story, but they thought it was worth a try.

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