Assignment:
Read Friedman's Price Theory: An Intermediate Text
1. Describe the difference between ordinal and cardinal utility. Use information from the slides and from outside resources, such as a book or the internet.
2. Graphically derive an individual demand curve using a price increase of good Y (note: quantity of good Y most be shown on the y-axis). Be sure to label all curves and axes. Explain.
3. Explain the results and implications of the First Fundamental Theorem of Welfare Economics. What are the theorem's shortcomings? Use information from the slides and from outside resources, such as a book or the internet.
Readings:
Price Theory: An Intermediate Text
by David D. Friedman