Changes

'''Introductory''':  1. The total utility of a good represents the consumer’s _________________.

'''Introductory''':  1. The total [[utility]] of a good represents the consumer’s _________________.

'''satisfaction'''

'''satisfaction'''

2. Conservatives say a bad effect of raising the minimum wage is that it causes more students to drop out of school.  Why would that happen?  

2. [[Conservative]]s say a bad effect of raising the [[minimum wage]] is that it causes more students to drop out of school.  Why would that happen?  

'''Students are often paid the minimum wage, and the higher that is, the more attractive jobs are to students.  More students will want quick money now rather than stay in school and delay their ability to make (more) money later.'''

'''Students are often paid the minimum wage, and the higher that is, the more attractive jobs are to students.  More students will want quick money now rather than stay in school and delay their ability to make (more) money later.'''

'''It's best to offer a monthly package'''

'''It's best to offer a monthly package'''

6. Bad British economic policies and a fungus wiped out the basic food supply of potatoes in Ireland between 1846 and 1849, killing 500,000 and sending many Irish to the United States.  Do you think potatoes might have been an “inferior” good then?  What would you expect the income effect of the shortage of potatoes to have been?  

6. Bad British [[economic]] policies and a fungus wiped out the basic food supply of potatoes in Ireland between 1846 and 1849, killing 500,000 and sending many Irish to the United States.  Do you think potatoes might have been an “inferior” good then?  What would you expect the income effect of the shortage of potatoes to have been?  

'''An "inferior good" is one that has increasing demand as income decreases.  As income decreased in Ireland, it is easy to imagine greater demand for potatoes because that is all people could afford.'''

'''An "[[inferior good]]" is one that has increasing demand as income decreases.  As income decreased in Ireland, it is easy to imagine greater demand for potatoes because that is all people could afford.'''

'''The income effect is the increased demand for a good, when its price decreases, due to the consumer having more cash (more real income) from the price decrease. The consumer has more money to spend when the price of the good declines, and he uses some of that extra money to buy more of the good. This effect is larger for goods that consumers depend heavily upon, such as certain foods and gasoline.'''

'''The [[income effect]] is the increased demand for a good, when its price decreases, due to the consumer having more cash (more real income) from the price decrease. The consumer has more money to spend when the price of the good declines, and he uses some of that extra money to buy more of the good. This effect is larger for goods that consumers depend heavily upon, such as certain foods and gasoline.'''

'''Honors''':   

'''Honors''':   

7. Do you think a Giffen good really exists?  Can you see any possible political bias in the claim that Giffen goods exist?  Your views, please.

7. Do you think a [[Giffen good]] really exists?  Can you see any possible political bias in the claim that [[Giffen goods]] exist?  Your views, please.

8. Suppose you are a rational consumer who makes purchases by maximizing marginal utility.  One day you hear that the price on a good you purchase (e.g., milk), falls by 30%.  The Law of Demand says you should buy more of it.  Using only the assumption that you maximize marginal utility, prove the Law of Demand as best you can.

8. Suppose you are a rational consumer who makes purchases by maximizing marginal utility.  One day you hear that the price on a good you purchase (e.g., milk), falls by 30%.  The Law of Demand says you should buy more of it.  Using only the assumption that you maximize marginal utility, prove the Law of Demand as best you can.