Econ 331 Test One

The three assumptions about preferences:

Complete ( Knows what they prefer), Transivity (Preferences are consistent), and Monotonicity ( More is better)

Convexity

Averages are better than extremes

Continuity

Happiness doesn't change drastically from small changes

What does a useless good look like on the curve

Vertical line making Y the useless good

What does an economic bad look like on the graph

Upward sloping curve

What does a perfect substitute curve look like on a graph

Downward sloping and the slope has to be constant

What does perfect complements look like on a graph

Right angle and the point is the perfect bundle

What is the equation for a budget constraints of a useless good

Y=0 and X=income/Px

What is the equation for a budget constraints of an economic bad

Y=0 X=Income/ Px

What is the equation for a budget constraints of a perfect substitute

Whatever is cheaper

Five things that shift the demand curve

#of buyers, income, price of related goods, tastes, expectations

What four things shifts the supply curve

Input prices, technology, #of sellers, expectations.