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I. Introduction

I. Introduction. Economic Theory of Choice - Certainty. 1. Feasible Opportunity Set 2. Criteria for Choice 3. Optimum Choice 4. Equilibrium as Aggregate Assume 10,000 income in each of two periods Transfer at 5% Then Die. Opportunity Set - What are the possibilities?. Extremes

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I. Introduction

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  1. I. Introduction

  2. Economic Theory of Choice - Certainty 1. Feasible Opportunity Set 2. Criteria for Choice 3. Optimum Choice 4. Equilibrium as Aggregate Assume 10,000 income in each of two periods Transfer at 5% Then Die

  3. Opportunity Set - What are the possibilities? Extremes My mother-in-law spend as much as you can now Rational world can only borrow what can pay back A + (.05)A = 10,000 A = = 19,524 Scrooge - save as much as you can 10,000 + 10,000 (1.05) = 20,500 All possibilities on bounded straight line

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