Topic 1 - T2 Flashcards
(15 cards)
1
Q
What do the intercepts on the budget set show?
A
Maximum affordable quantities.
2
Q
Marshallian/Uncompensated demand functions.
A
q=f(y,p)
3
Q
Total budget elasticity.
A
e = y/q* ∂q/∂y = ∂ln(q)/∂ln(y)
4
Q
Inferior goods
A
e<0
5
Q
Normal goods
A
e>0
6
Q
Luxury goods
A
e>1
7
Q
Necessity goods
A
e<1
8
Q
Own price elasticity
A
η=p/q* ∂q/∂p = ∂ln(q)/∂ln(p)
9
Q
Cross price elasticity
A
ηij=pj/qi* ∂qi/∂pj = ∂ln(qi)/∂ln(pj)
10
Q
Giffen good
A
ηii>0
11
Q
Elastic good
A
ηii
12
Q
Inelastic
A
ηii>-1
13
Q
Complementary good
A
ηij<0
14
Q
Substitution
A
ηij>0
15
Q
Engel aggregation
A
SUM p* ∂f/y = SUM w*e = 1
