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Econ 309-C01

Summer 2018

Assigned: 7/5/2018

Due: 7/9/2018

Homework 3

Read Chapter 4 of Friedman’s Price Theory: An Intermediate Text

Read: https://marginalrevolution.com/marginalrevolution/2007/08/the-first-funda.html

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. (2-3 paragraphs).

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 (1-2 paragraphs)

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. (2-3 paragraphs).