The document outlines topics to review for an economics midterm on Monday, including homework due Friday, income and substitution effects, production and price-consumption curves, and how the price-consumption curve changes depending on whether goods are necessities, substitutes, or complements. It also notes that for perfect complements, the price-consumption curve does not depend on income or the price of the other good, and provides an example graph.

1. Outline for Wednesday, July 23
Remember
Homework due Friday
Midterm Monday
Review Tuesday
Income and substitution effects
Production

2. Price-consumption curves
What if we don’t have a Cobb-Douglas utility?
If X is a necessity and we change PX… the PCC is
vertical
If X and Y are substitutes and we change PX… the PCC
slopes down
If X and Y are complements and we change PX… the
PCC slopes up
In particular, for perfect complements… the PCC does
not depend on I or PY
This is easier to see on graphs of Price and
Quantity