London School of Economics

London

Economics B (EC102) Rant Thread 2009 - 2010

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Holy hell, today's lecture I only followed like 40% of. Please tell me other people found it difficult as well? It's only right at the end when he put his pen on the projector thing that I understood he's moving B_0 to B_1 and then B' is B_1 just shifted.

London School of Economics

London

Reply 21

Richer

Swayum

We should arrange a EC102 study session...

Reply 22

danny111

Richer

Is this to do with the idea that when the MRS is greater than the slope of the budget constraint then you purchase the product on the horizontal axis. And if the MRS is less than the slope of the budget constraint then you purchase the product on the vertical axis?

Reply 23

Richer

danny111

So because we don't know the MRS this means we can't make a judgement that one will always choose Green apples?

Reply 24

danny111

Richer

So because we don't know the MRS this means we can't make a judgement that one will always choose Green apples?

exactly. we only know MRS is constant, but not its actual value.

Reply 25

Richer

danny111

exactly. we only know MRS is constant, but not its actual value.

But ignoring all economics. Surely if both apples are subtitutes, you are indifferent between the two and will therefore choose Green apples because it's cheaper.

Reply 26

danny111

Richer

But ignoring all economics. Surely if both apples are subtitutes, you are indifferent between the two and will therefore choose Green apples because it's cheaper.

yes but in economics the rate of substitution matters. in ordinary language i agree substitutes i would think of as 1 to 1 - i.e. MRS = 1 but in economics perfect substitutes just means MRS = c where c is a constant. it could be you always regard 2 green apples as good as 1 red, or 2 red as good as 1 gree.

Reply 27

Richer

danny111

ok I get you. We would also need to the slop of the budget constraint for the answer right?

Just the MRS isn't enough...

Reply 28

danny111

Richer

ok I get you. We would also need to the slop of the budget constraint for the answer right?

Just the MRS isn't enough...

no you know the slope of the budget constraint. what you dont know is the slope of the IC - all you are told the two apple types are perfect substitutes so the IC's are straight lines. but you dont know their slope (i.e. the MRS)

Reply 29

dollarLSE

Anybody looked at Quizz 3 and looked at the question on orange juice and apple juice question number 7 anybody have any idea how to approach this question i am but puzzled?

Reply 30

Richer

dollarLSE

Anybody looked at Quizz 3 and looked at the question on orange juice and apple juice question number 7 anybody have any idea how to approach this question i am but puzzled?

Perhaps you might know how to after tomorrows lecture.

Reply 31

Richer

danny111

oh right ok. I thought you might need the monthly/weekly income in order to contruct the budget constraint but I guess not.

Reply 32

danny111

Richer

oh right ok. I thought you might need the monthly/weekly income in order to contruct the budget constraint.

yes you do. but here the slopes are important and since u know prices you know slope of (any) budget constraint (i.e. for any M = income)

Reply 33

dollarLSE

Anybody looked at Quizz 3 and looked at the question on orange juice and apple juice question number 7 anybody have any idea how to approach this question i am but puzzled?

You dont not need tomorrow's lecture it is from the stuff we had in the lecture today!!!!!!!!! :s-smilie:

Reply 34

danny111

dollarLSE

You dont not need tomorrow's lecture it is from the stuff we had in the lecture today!!!!!!!!! :s-smilie:

Draw diagrams. seriously. by exam standards this would be section A. just draw a diagram of BC and IC with all the information given.

also, this stuff, or rather the thinking behind it will come in handy next year in Micro II for firm and consumer optimisation so make sure you learn it.

Spoiler

Reply 35

Sports Racer

dollarLSE

Anybody looked at Quizz 3 and looked at the question on orange juice and apple juice question number 7 anybody have any idea how to approach this question i am but puzzled?

Is it the one about how much extra income he needs to buy his original bundle?

If so, this question is very easy. Just draw the budget constraint and indifference curves.

You need to know how to draw BCs and ICs for perfect substitutes for this question.

Reply 36

dollarLSE

Is the answer $6/wk just to check as i not sure whether my answer is correct and whether my diagrams are correct according to the information given. (1 cup of orange juice as a perfect substitute for 3 cups of apple juice) M=$6 and apple cost $1 initially and then $2 while orange cost $2.

Reply 37

danny111

dollarLSE

not for question 7 no.

Reply 38

Joy Division

Intimidation

...

I know, I would kick myself out if I were Dr Judith Shapiro.

Reply 39

danny111

Joy Division

I know, I would kick myself out if I were Dr Judith Shapiro.

heads up. only your 3 best modules count.

also you wont fail unless you are a) v stupid b) stupid and lazy. given you got into LSE i highly doubt a) applies, so just dont be lazy!