.c om an co ng Lesson 2 Consumer behavior cu u du o ng th - Budget constraint - Preferences - Utility 1 CuuDuongThanCong.com https://fb.com/tailieudientucntt .c om ng co an th ng du o cu u BUDGET CONSTRAINT CuuDuongThanCong.com https://fb.com/tailieudientucntt .c om Budget Constraints cu u du o ng th an co ng • A consumption bundle containing x1 units of commodity 1, x2 units of commodity 2 and so on up to xn units of commodity n is denoted by the vector (x1, x2, … , xn). • Commodity prices are p1, p2, … , pn. CuuDuongThanCong.com https://fb.com/tailieudientucntt .c om Budget Constraints th an co ng • The bundles that are only just affordable form the consumer’s budget constraint. This is the set cu u du o ng { (x1,…,xn) | x1  0, …, xn  and p1x1 + … + pnxn = m }. CuuDuongThanCong.com https://fb.com/tailieudientucntt .c om Budget Constraints cu u du o ng th an co ng • The consumer’s budget set is the set of all affordable bundles; B(p1, … , pn, m) = { (x1, … , xn) | x1  0, … , xn 0 and p1x1 + … + pnxn  m } • The budget constraint is the upper boundary of the budget set. CuuDuongThanCong.com https://fb.com/tailieudientucntt Budget Set and Constraint for Two Commodities x u du o ng th an co ng Budget constraint is p1x1 + p2x2 = m. cu m /p2 .c om 2 m /p1 CuuDuongThanCong.com x1 https://fb.com/tailieudientucntt Budget Set and Constraint for Two Co ...
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