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Objectives In this chapter we will look at some general features of Britain and set the scene for the more detailed examination of particular aspects of life there which are dealt with in later chapters
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Structure Describe budget constraint -Algebra Graph Describe changes in budget constraint Government programs and budget constraints on- -linear budget lines
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Structure Present and future values Intertemporal budget constraint Preferences for intertemporal consumption Intertemporal choice Comparative statics Valuing securities
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Structure Endowments(禀赋) Budget constraints with endowments Net demands -Price offer curve Example: Labor supply Comparative statics Slutsky equation revisited
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Structure Money equivalent of utility gains to trade Consumer's' surplus Changes in consumer's' surplus Compensating and equivalent variations Producer's' surplus
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Structure Describing technologies Production set or technology set Production function Isoquant Marginal product Returns to scale Technical rate of substitution well- behaved technologies Long run and short run
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Structure Market equilibrium Quantity tax and equilibrium Tax incidence税收分担) Deadweight loss(额外净损失)
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Mission of Economists Gary Becker: believe that the main purpose of economics is to understand and help to alleviate poverty\ Who are the poor? How can one help?
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Structure State contingent consumption(依情 形而定的消费) Preferences under uncertainty Attitudes toward risk State-contingent- budget constraint Choice under uncertainty Diversification and risk spreading
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Structure Economic profit Short-run- profit maximization -Comparative statics Long- run profit maximization Profit maximization and returns to scale Revealed profit maximization
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