Scarcity and productivity II

Materials for class on Wednesday, January 24, 2018

Contents

Slides

Download the slides from today’s lecture.

Income and substitution effects

Again, it can be hard to wrap your head around how income and substitution effects work, especially since indifference curves are generally imaginary.

This video is an extremely helpful demonstration of how to find income and substitution effects for normal and inferior goods:This one is really good too.

Additional references to things brought up in class

• New Fed chair
• Substitution effect of base metals as production frontier grows

Feedback for today

Go to this form and answer these three questions (anonymously if you want):

1. What new thing did you learn today?
2. What was the most unclear thing about today’s class?
3. What was the most exciting thing you learned today?