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Intermediate microeconomics
Chapter 1
Lectures
The two goods model
Total expenditure
Budget line
Budget line, explicit and implicit
Drawing the budget line
Changing several parameters in the equation of the budget line
Normalization
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Total expenditure
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Summary
Total expenditure
Cost of bundle
(
x
1
,
x
2
)
:
p
1
x
1
+
p
2
x
2
T
E
(
x
1
,
x
2
)
=
p
1
x
1
+
p
2
x
2
(for total expenditure)
Example:
p
1
=
2
and
p
2
=
3
T
E
(
x
1
,
x
2
)
=
2
x
1
+
3
x
2
