EC202 Summary and Mind Maps, Schemes and Mind Maps of Microeconomics

Download EC202 Summary and Mind Maps and more Schemes and Mind Maps Microeconomics in PDF only on Docsity! bing sabe Roprete atObi uw % a Repsenvabuey 7 Sersunge woh 5 CONSUMER OPTIMISATION Lexicog caphic” arty 7 fue, 4 SL NECESSARY AND SUPFICIENT CONDITIONS The prepecence “eeponws cos can agord - Z yi Ramen % HEC NE wh cep . 22 implies x%= 9 repierenied by bi, puncte ae eas ult “7 max We) ie, ae 7 7" wmphes % wilieg Fine | conwfaing J PT t+ Py SM Ty, (ADS mean & 7 Ly ge a Le KOR ip gor y Function & implies 8 Lesa a } ~ bey pair or KOR Us P where slope of (C= slope op AC : a Beene Lees non-sasaver of" Kunde, guasi concOre ‘Slope of BC is price ramio - Le { BEA mean ie Swppcient Condition for aLows me or MOT Fey, — ie wper arel Pe {set of venien wae A eoneti6ok x=3 commodiba tw he 9 4 Feb ae Conds * Slope OF ICs rRS 2 MY: —, marginal whl! i . por 224 i a 5 m RLS gor every TAU, — fovral by dipereanictiyf tre GO TUBA op bods e@27u@) “cer or cobb Dougan ux zine wet cack MANSY oe Sines wee Bin -yue) \_, 5 & roctt nonseniatio G Any iactearing Optimal bundle i god tos aad when APR and ‘se suppcient Tonaction of Ue reprerent L. gee * exp conaseon ee FTL nae Weta Neocon goo 2" oR my ae uv ho be 2. PREFERENCES : ithe aie é “ G & is eee prejrence Y dapna, weer Low indliperence HeLawion pepiene over | (80 > bat won't Alwaiga work FeAFECT commembirrs WO ta)= mia Ee, 4x} ee eee > COmek prepOHeAdd> : corsunen Cremer her’ compan Utiuties bundles 2 BATIONALITY SZ Deir average % goods 2 otenes O Compiatenass ~ the S++ two comen tv «Strictly convex peperencey | conuner Cin alway For every EX, ip xy x Fae compart Pe wich X# %, len bof any bundle. KEN a weighed * auectg® AR a (l-w\ ESE LECTURE 1: O Teansinviay ~ ig XeY anh Yue ten Kz Row Sarictly pepe ree ol. i . ly prepe. rererences cut st yh 3 a os Monotone ip Strongly monotone if | gin ou T consunytion Jor ncieae the amount af YI ve You contune of day ore ob every eek gook without decrearing | MOE & herser | Sean be Ue consumpron op ! of &ny utter good _ A wearenod to local} hon Sadao SARECAP OF CONSUMER Thelt ——SSSSZ e~ Budget consoaint Giver the et of bundy comune STATEMENTS SS with bork the sabgied, iets rAbORAL Commuter | Ome Where A i tne aka ‘bundia’ « ‘bundle of &% good” Assure buy constraint is Okt UReOW > aihiney L CONSUMPTION SET AND BUDGET SS Wu ak alway con aor AeA G COnmimprion pet is charged the ¢ cormumpds &~ RE OL goods sure eros Equation is’. wee asnamptn. consuned can & goo B+ + GSM urrounded- —— OMune \ * ; . Re apppee bound gor ig we ove , Walrasian budget Containt /eet consuming» godt 1 goods ten connmpben, & set of puncte cur Consunes CON « apiniteey dinsibe~ CRO AREA (6,25) € Kool Erg EM | ary t Rebl ne. of goods ee is the posite orthant ch be Comune To solve wie Lagrangian or setimas-pna Les tekrecr sugstiTutes find vhichd opting 24 PROVING ANd o1seeSunuce ALPROVING AND 0Isp2GvinGe Ly To prove a seaermrent of foim ADB | Gor rend te Show i hada th every | act (X anh Y) > or a YY not (X or YY = noe (x) ASB ue Say A and B we _— tm each othe, ADB Ace al 16] ak At ay 2.2. THE CONTR APOSITIVE wo CoruGpositie is lagicat twin of & statment To disprove a mor pent of A> 6, you read t pind Qn exampia whee AO te but Bh PAUe Wanye 8 ACB Se Ais SUBSET is Cnet Brace A of becouse ty ae equivalent to each etler Taking conbapesrive of the contraposithe get back te onginal stabenent es ContrOposible of Ag? Lo bg LHD XZ $ Ran CONDMOpOSE OF xLtaxcy similar 2.3 Wa and NEGATION Prooe by comvadicton, _Z/ GY peau A moana Z sg nears ke Yor au ov oy ‘fer Hele dovint | there exists’ emg) ey - 29. Y¥X7O near, for au x grenier than 0 not Xe Negaion for tk stagnent Ve € A, LEG con une dy xEA = x EB aad not — SN&atonop thd y axeA, st. c€B ws WhCK mom ‘thee, d0em’s gut Gr © wy NOTADOR » Ti'Rox whick u in & » E245 an element of" Sut nob « Gis a subset og* in B (xépn ox) © FE -% eat a subnet op” a Want © CNnodpe 5 S.EXISTENCE OF WALRASIAN ( *. UNIQVENESS OF —— eee ( EYNIGVENESS OF () GL BASIC FRAMEWORK M how scarce reuren EQuieiberA Ly & wotrasian s WALRASIAN EQUILIBRIA \ SS cue atLocoURd. beter. L Equillin vim wit NOT TH mouy eG watranvan \ 4 v & exogenous agenb of economy be muitipici a coe” : : Rot of nore oxsienea: SMMP eve | 2F aptirol biealds equation & ik nek TBE Ag ana TOL endanonen> ae oy Set of supicient \ and equiviei, nok quai) be Ona 5b T of OD inwal allocation oy endownent Carly 224 2021) coraitions ¢ 2OEee \ bo eg ig both unique digosert, goods on ba. * Ce, 02.89) Lge LMA EFL) qwalapia a gtk oe . Commodi, Gr en. vk 5 ' * ie * t=O. ean ean yuuion hoe sane unity > if inibial alloceton i Grajarencen of each agony Fy ? a guncs thot at WRUIFASION Equiliiemum SA eens L TGSSUNe piepenDs wt eprerenttbl 46 = Ly Cpr if 25 70 por au penece subs, —agtiocation und ae “LR <pa Ben ao WE inauivikuictla, cond ad OLN pi py ae preerenan at srt / | © dary an exchange economy, no reducoar 2. if , hae smetly guasi- qulimion gr® « Comey + serengl | @ weir -azpined groperey rights FP 2pus both cmaure ——concare (cancer) pagent, \ %Y aecasion monatone, ten ws f | © maret por every commodity (eg. oven cuanaw ae interior pain , but + gyorg, eC Cong budget Une ik unique WE | @ tveryore & apni r diperens points Ngiy mone’ ij we ‘ pyore pre tare! © Goods ae vivauous © Aguntis usitiog oniy depends on goods bey commune otler Up ube prce pouch gor them @ No srameccon coss tm trade ) @ every induct is (A¥ONL Lcomplyl © tranribre prejeren> ~ hoor optimat bundle st. budget constrain 9» unreativo’ curupaptcl LECTURE 2: WAURASIAN Ua@ mame clear -n0 man damand of suphly EQUIUBRIUM IN PURE EXCHANGE AX 9, luting BYnc, then O Wording EQuidomnum ry bai se bo For 1x2 economign Xai ch (goody «2 Consunen) -—| Or EdgQuortIn YOM put Reperend set op seo, “| Xo é nor en a invial but ip chy 6, ae Bing & Front ERE Suycaence Pty, ConobiBons volte, 4 en mutnpllciny 36 noOre has Cy We GUN G bRrevownk ihante tb KEK OveRGrd ANON OA » AS conmunption aocabons tha = & mecsion op good B Ss an a clear tHe movie of secre > Lar Ene, oe Exeass demand a dijerent sa anna” hnoue noe ence Large 84 ton wptiow then exeon furcoon i < pace oleae, PRL & - otal: good - i Zp) = Zier Xulp)> Eun Cie oxtocen trntontat geod Pere ends damand zip? degX On cig > veroced | geod 2 M . . vig Lp) ~ve, , Ardownent ~ iwDOl endowrert 4 WE Betrod £00 Computing Hen fen ac ip domank > 1.2. WALRASIAN EQUILIGRIUM Should b2 on budget Une Walaa equiion o mee aie ~Tarua 0 And paces G tnahivide ae Pn Consumer, ote, + 20)=6, ten A ote damon ucts once, iILUGL hoo epecere L mona maven cacy 58g comune —butlget constraimt; — dat wealth 6p s une GL ate snpuned : Can snow when NOT g WE: ; FYING @ JUNC O} prea, og) purction Fe Xi lp) . ee 85 damn WE 2 Calculak goon damonst € Rey is total vent FR = PO + Bs Cis oT ¢| J) Find pea vector that suives demanded by comunen [ ree HRM wealth = value eS Ug Lao damon — elon damand Of eveny good = O (220) @ pune of price, * Px ip 6} endownent In WOUGsicL ak é a has. tuatienn CME); > Bch Cormuner solve ek j—— a= j /| a ee & tora. WE ny Oe to clatke Wain $’ Law You hae a pice vector - excep ioe? Mule oF thot YOUr anseer C whee Geryord maximils Wainy Murinrisd bon Prada Suppty & & Pra veor Les. xp) OL agents Dib OM individuals Utividg +6. budget constraint fume) > geek a Kae wh ane ie aa. damondr hove lecelly ron~ ank mare claw MANE [X1) sb. PX epee . _ Builrivon paca d SAHARA prepeencs , » pts WE pie vector rex " o AS both poland ait not equad, Vvettoy 1% alt te vale op excon xe ae d-dimansional veoon shou mashed de ad cwar, go ie matics excpt Om OCT equals = ~WE allocation FENN” for every pet a watarion quod, cao s — Of p.2(p) 20) carmen gpomal. bune gpod, terar demented equals EQuilomum Piro, Cen maalet dopend cr price vector goto suppued a e@angmy pos 7 mune Oe Ca cuurtty a Beats eadownorad BUicling extension example Lure WARd w bud exterin, “3.3. THE COASE THEOREM LLWHAT ARE EXTERNALITIES ? but it courts negate exe natiby Lows ould hove | 20; on Sam ane caso shadow cr t “compe noone = come tuned On his Swiiming pooh N=) Need Sam with AS long as Rnowig Laura's Payment at property ngnty 9.0.2.MISSING MARKETS benef > Sams Ware = oot aie wert depnedk 7 FF an enternatity is aM An ex ternoctity occur wen The COSL ov KORDA that @ penons wei-being on SRC a third party who & firmly producton capabiliy Did nov choose to incur thot — ts aiectiy apeded by ve Seken. i . - - ‘GeqeNGM ssches wakes cost gors ns and. Vee cue litle CO% cr behofe __/ 288008 Of ober consumer . 7 can , Critria. for theorem no transac . & OF firing externality a ‘missing mohet’ a9 aa ES ost, hon opicient Posibe externality = the change ice estabishos am market for tle Grew apyecread Sutconk will be reaciedt MOkky eCpient beter oy Ly Negative exdernadity = hegarbre oxternatity Change makes recperve waghour gow » Poltusion VL Ono wearth eppects - people nat > 2.FAILURE OF wore of. * intervendion, tex —, VOUCHOSS KO cancowe wnung pune 50 Fish auersion WELFARE THEOREMS WO4 inepricienc becor-e a NA compet injormation— NECTARE THEOREMS welfare teolems peril since payers cil Bire’s pr in ‘ ' a p ahibe, cae for social cove eet & Xo So. we assume piste Te show senethin, L 1% PENG OF exten Hey reach eppcient Outcone . > nego cy vp - US NOT pareto optiniaL, ampie - Andy har e4=(0)2) BING an altemadtive thas — AURA Preferences Ue =x ay Xy,~Lep 7 INGHRS i wateasian 50 US likes A When fich smoney 3.21 EFFICIENCY THROUGH eee POLLUTION VOUCHER §mtkeT Fon SSS ee POLLUTION VOUCHERS | LECTURE 6: AP “ealue of P Supp > Fixed aston oo mse ate y ‘ 4 eae conic’ of cia! VA "Ehemalts 7 sxe v Ob EXTERNALITIES Andy > Xeve See cohen 7 Lone WE is not Social Sopely cecal , me PRN: Z 4 IC cures age Parety eppciont Pn praducton, 1 Ot Pree ; Py depend en bob’5 ° two Nw) NC. . ConsumpHN. deus Bob doen't east nt wind Pama > incerrde LOv Pitre Ineye (negative Wark, tke into crount tn Ge 2 ¥ c In POLLUTIOU REDUCING TECH CONSUMPTION % #AE nagarire exiemalty ie / So thy Can wel their peemit SATERNALITY) She pukiion analy whan > Govt can cop amount of poltunon eS ‘ Vn. Smoning produud hy issuing pod number of 7 For ee cones pour vouclen Rnown av “ernolen’ Sgane PETE EPC EME 5 . , 3.1.2 PLGOUVIAN a pollution TOME ecemciido, <7 Z.POSSIBLE GOVERNMENT ~ Negotre produccen A. permit, mae quantisy is ee Sore ae id ier SUBSIDY? ty SLLPIGOUVIAN TAL poducd thie = INTERVENTIONS —— externauey example Subsidy of Candy’ AIAX 0, e mse social aphmum we wit comidore? ““porroed Frey producing the : b Ay Pp - > si f Pe Pc ic “ rRaInet trarysoming a i Consumpdicn g cod pole, Pe Pm [=> ~~ Corrects) ; capt For postie® iApucs (2-5 meta, pLastic) tHe bland Wi Ch mats conects por’ 8 Overpreducten Sapp’. euternavy, w ; ' ~ Career fe \ vee en mY XEIDAUEY, BS into treadmills CrUs0e WON of) cay PENS Way Re GRIN Im Guan bby Lyle piter polluier, thon puts negate loge a: ty posite eueinaliby — fe Remand PrOodued than entemnaliry. 730 firm soley prigite ec leinadiny pa > CONRGE Qumnndy _ Stak optimum, Gq ip giv benepib society by onakary POR witheus He dadtucignt Los rm mathe qm GE Ay a Jb rie BW ae e) " thinring about s marginal social bnent co) ope m oe Eppicitant sociad / c net. peop a and negABe Exim above demand cure, Gm However: Hard por govt t calculak optimum wier, Soy Sapp ROGTENES “tren On Curae ° 18 C00 low cand sociaa Size Of EKER AbiDy ; Mme piremy May oie Qiks positcre Laso WE is NOT OPM iy MgLeY Oe POU mod, but CU ae taxed tHe iane nS Hemaat — DIALIROMA GE pare? oppmad caigd Oy, NEGATIVE Eviconanty® |.1 FORMAL DEFINITION OF WALRASIAN Wt PRU Tach agent has | - 5 1s Preperences Uz lx) Fundamentals “r 2, Endowment » €e Production econamy : 3. shares » (Scrm mem oD = consuner 2. FIRST FUNDAMENTAL, 3. SECOND_ FUNDAMENTAL THEOREW THEOREM OF WELFARE OF WELFARE ECONOMIC Ss ECONOMICS oy) % an allocation ig ponsiblery 4 (cry) is & Pareto epncient allocation, if GYAN preperences convex, Connhuous ¥ loceuly 1. Ail pOduCHON seH ae tahan preaneee vets Qe convex, clowed x sanapy] f° = goods “>? each pimn has producton feasibie gor each MEM, Ere2 disposat ems set of pinnae fee Ym © Yom E¥m So Tren Cx)y> is Wautrasian Equilievium allocation! S Each comsuney hae A arrasian Equiibnum © 2. Markets cedar: nee wee Th pitti edad clue Gone @ taple (p, x,y) Such that! Fie Ky = Zee *2ye Sustained oo & mica tsPh4 ee damand < endounenct + © EACH consumer solve, UMP. An ailocanon Goy)is “ vaohe. Font eon Blom SROHE mak UL Sb. Pee Spee Pareto epicient if & is feasipe > more cledting. ES um Pe Yen YA odber poasibe alloca non > FOr an input i ouiget © Each given scive propre maX+ eno cesar it concn Qy ou : . ters we Psd 1 vith. 9) 2 wlry) ve Awan a) LECTURE 5: WALRASIAN EQUILIGRIUM Pecoromy | @ AL mavkets clear 1A 2.3) with ujit9 7 uy ey apee sermoe AND WELFARE THEOREMS IN 2mm dedin lex, o30, aye) oe a ECONOMIES WITH PRODUCTION, "" oo * For an output? Total goods feral goods amouns dananctecl= . abeady in economy Amount ia economy Excess damon vector onginally plus amoint AA producd by pars G re Fundlament Theorem is ip ail consumed hare locally nen- sanaed A preprences, chen any WalrasAn Equitonm \. 1.3 WORKED EXAMPLE fOromy wee See ee md 1S Pareto afi Chee 9 ame i : i DIAGRAMS FOR AMC. eb Anay: 226.6) Bre] oayouns fm) Snes presences Ug= xk wc% i i Gob! 29 =(i2,0) ped ae 7 fob duns > L2METHOD FOR «te alp) <0 = een supply Fim 2 Ane prod set ¥.2 (yer lyco.que-y.t FINDING + ig 2tp) >O = excess de meena ~N 4928 Yi ike a eee . L : WALRASILA Finding, Walroui dn equilinun Tuma ped see R= LyEm ly co, we Fy | ; ' , EQUILIBRIUM O Gading co price vettor - Fires produces @ Consuneh opbmal bundle st. budget # 5 pm P © Prog max prod vectors + Profits on 22vo-proapt consoraint , . ain a so that [Sip ; for a i Con propa line andy solkes unPy indy Ua txade tt, act L Find, prop maximising prod *e erat (2ip) 20) (no exces , “m gf eee Reps) st o tftar S Cpe The netic — Wet Of each Firm, Ym Op) ‘. ov supply wipy> fy emivso, ye=-4} bap. nah (non een PT egual w eccchale-and PEORL Pe Yrntp) Pie walms’ haw hos A Greed radeon», > BP Ye weeps 2 2. Find each consumer opernal Ankh pp PO Wy thon ip ais r Pi rpe + Xa lp) = (44 oe Ben res ap + BF bund St. budget Constraint, ci fp) markets cluar ir au vpor . . pe pe rel . oat Pe Ged oO, 3. Write dowa Maher cWanng markets burt ont, they Fem: Ya@p)= apt ap. Gi CEE) 5] masmet caring se B,1p)=0 v 226pkO conditions 2(p)=O 1 check muse alse cane in the So propit of: ph ) pr weld A\L@ WE of Prices P2 OD ant demands: oe eee Got clay Fingi mourhet too 7 . fF) = x . fea ga” a vector Pa n Te =P. Yip= p (Ze) pe (& pr MARKETS “Xp = (6,6) en? Ht BY au mashed mere sp 2t:3. IN-WORK BENEFITS > Most pirmy prowdé \L, Govt tax INTERVENTIONS PUbUC goods gor Syste encourages Beir employer firms to spend mot © MOMMY on compensahng empioyse) with in-work, penggre & Paying employees hgher wage b oppoytunioy Wst OF pubic Qpads Ly makes Liems moe competive XK - ia, 2 labour sroutheet wa | SUBSIDIES S ut gor provinen endl 24:2 TIEGOUT EQUILI CRUE Xo ip we howe of diperent local prond2s of goods thot canbe non rve.uous Or only only partially nvalrow and exCuudabu to thot that haven't paid gor them, then can Roe, is Compeb oon amongst dugerent \ocad) poviden of these goods SEG: spore Qntres WICH Of 2 OOM 24. PROVIDIN G PUBLIC GOODS “i, £80 mores wl GY GUNDLING 265, 7h were WE @ good i> AGr-exclUdabe,podue 2.3.1. DEMAND CURVES raped meena Subsidies re comect: public goods lat, govt revtla G But govts rere Morey — ching Help fron taken wiih credits . PROVISION provide geod dUkectly UP CROWDING OUT Govt coud prod = prvate provision, > .& urprovision Of So to get Quant procdud every marker neyiciency LECTURE 2: thor don 3.POSSIBLE GOVERMENT — Ly 3.2. GOVERNMENT gers could seep Hr > PUBLIC GOODS \.WHAT ARE PUGLIC GCoDs ? a Corse ae 5 RvObrous: ig De sane Unit Op that © 7 ee 16 file qook cannot be comuned by hott ena progucing multiple eonsunes or Lema SOW HAreal g hase tee asod ig dopiota bw resource, ent ~ power tp exclude other i $ pero 4 ony peopee pom consumung Biuke amount avaiable) Unee L, good / Pubic 900d US NONn- excrcable > PrIVELR Sood is / and non-riValrous exttudabw + nvalrouy (2g. prrewories, sees Vigivic) 2-9. chottes jrood) > Z.INEFFICIENCY OF THE FREE MARKET AND THE FREE ~RIDER PROBLEM ip Anoly Ue alone au — _ appmat demanol ¢s 2.1 ROUSEROLD PUBLIC G6 Paiete YP lene , Sine . only him rete te ly MODEL. se each individual has Gn anh plage sO CONVO O feopia shout ahowe m+ Yy & Te » 1B Andy Ue wrth and can spend on 4 Srey 0b, Hee is te pase good Cinesting JAR Pe ws rape “ABER EFT - it by bundting © in with oeler 2x0 Wabie in howe impOveneres) igood. jot both hae ine mabe we goods se Ropin uring to pay gor te Pn Price. Aa ig Or On pRVale geod (spend Pioneer’ fren -vid On super! x lA ocedake % aS rs CONS “on 0} ui Lindaht eguitibnivs ie |Rapegae public goods] on Vemvewes dive < aaa an Out al ual individual dormand if - . or me Asie : Aggie gas foe > cA ecowut {iden t lee soot \ a Rayos neack sonetning — Lo Houremouier would as coun’t pce ; NT adh ae a » benepit ig Hey coordinard ar cuotcemt where pi “ 4 & - ‘ dl : a : - discrmminate o> tity { 3 | 7 z 5 REED, obkvait | both conmbiue mort publicgood than in NE dont Brow each ade : AAR IACRAGE one od . ranges dbeandh \ Quornicy | FOUR on Mnaarginal OM atiie ther On, POM Where Bost Responses intersect bb le Nash Buse ere ge wilingnass to PRY, SO in rin Equilibrium 2.32, LINDAHL eQUiLipRiuM yerscal sum of ee a wirmauad [MER ean ome. When gook ts pubuc good, Mca aR OR ony When godda ue,“ 2.2,FIREWORKS EXAMPLE 2. neighhoun, Andly fob deeds hows many everyOre fOLeEA SAre quamhd4- pnvate, NE part TG They cae. op Le PRewolk4 wo set OY on NYE ‘utes a SCP CRA oubwone otal no. of prrewore we oy: "Uae Ca * lise one - +f 2 Appa a ' . 5 4 “4 : Ca tly WRYORE Giywice prices As ‘publicrass’ op b= bat Le fudges convydint: CatCg +f Sma tig + Benevount soci at PLonnee csp) good. increase, gap toda of am | Gocan pind epicient el 9 preworra WhO Row evenongs Gerard ¥ ehenn WE x PART i goure mei i thor oe oe, “bine wher wih Supply ciutes Uppciont ovicore increas ubtity - so Can DRAGS ustudy erin Bcd Me j Ry na , t 4 ; ion ‘ ‘abo = * BcieAY QUAN whet as Do incentt t gree Ade PE ere eer ore Wie goed Diuon Of ; : -t