1. Outline for Tuesday, July 15
New documents
Quiz study sheet
Hw2, quiz1 answers
Hw3
Recap Monday
Indifference map examples
The budget constraint
The best affordable bundle

2. Indifference maps
Indifference maps, like contour maps, show level sets
– bundles that the consumer is indifferent between
We know that
Indifference sets are curves, not thick bands
Indifference curves do not cross
Indifference curves slope down

3. Marginal Rate of Substitution
The MRS is the slope of the indifference curve. It
tells us what tradeoff the consumer will accept
∆Y
MRS = 0
∆X
It typically decreases with higher X