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+---
+title: "Lecture 6 - Utility and Latex"
+type: slides
+week: 6
+source_path: "/Users/ericvandusen/Documents/Data88E-ForTraining/F24LS/Lecture 6 - Utility and Latex.pptx"
+---
+
+## Slide 1: Data 88E: Economic Models
+
+- Lecture 6: Utility (ft. LaTeX)
+
+## Slide 2: Announcements
+
+- Lab 5 will be posted ; it will be due this coming Tuesday PM
+  - Utility Optimization from Today
+  - LaTeX in Jupyter Notebook
+- Remember project 2 !
+- There’s optional Zoom office hours on Friday!
+- Lecture Videos - sorry - I’ll just post to playlist
+
+## Slide 3: Change the Path
+
+- Update the path for this semester
+- Go and find the folder in /tree
+- In Jupyter ! gets you to command line
+
+## Slide 4: (untitled)
+
+## Slide 5: Lecture 5 Outline - Consumer Choice
+
+- What is Utility?
+- Properties of Utility
+- Utility Functions
+- Consumption Bundles
+- Indifference Curves
+- Budget Constraints
+- Constrained Utility Maximization
+- Demand Curves
+- QuantEcon Notebook
+- What is Latex? What is Markdown?
+
+## Slide 6: What is Utility?
+
+- Abstract and hard to measure
+- “Measure of Satisfaction, Worth, Value”
+- Units to measure utility??
+- Utility is a method to model how individuals make decisions
+- A starting point for math to model economic choices
+
+## Slide 7: Properties of Utility
+
+- Ordinal: ordering matters, but the numerical value in and of itself does not
+  - E.g. we prefer something with 3 utility units over 2 utility units, but 3 utility units in and of itself does not have any meaning!
+  - Utility only has meaning relative to other goods
+- “Consumers are rational”
+  - They try to maximize their utility
+- Our utility is dependent on the goods we consume, and they may affect each other
+  - Consumption of left and right shoes
+  - Consumption of doughnuts and croissants
+- Transitivity: If A is preferred to B, and B is preferred to C, then A is preferred to C.
+
+## Slide 8: Properties of Utility
+
+- Non-negative marginal utility: More is better
+- Decreasing marginal utility
+
+## Slide 9: Calculus
+
+- First Derivative is positive - increasing utility
+- Second Derivative is negative  - at a decreasing rate
+- Math Models - what functions work ?
+
+## Slide 10: Utility with 1 Good
+
+- X: quantity of goods consumed
+- Y: utility
+- Does this satisfy our 2 properties?
+- Non-negative marginal utility
+- Decreasing marginal utility
+- Increasing at a decreasing rate
+
+## Slide 11: Utility Functions
+
+- Utility functions consider many goods at a time:
+- Ideally, when modeling a consumer’s utility we would like to consider all the goods in the world, since relationships may exist between any combination of them. But this is infeasible :(
+- Instead, we simplify the world to assume that consumers only seek to maximize their utility between 2 goods.
+- A ‘basket’ of goods that the consumer chooses to purchase
+- We will simplify our choice set into quantities of each of 2 goods
+
+## Slide 12: Cobb Douglas Utility Function
+
+- Does it satisfy our 2 properties?
+- Non-negative marginal utility
+- Decreasing marginal utility for both good 1 (x1) and good 2 (x2)
+
+## Slide 13: Consumption Bundles
+
+- A ‘basket’ of goods that the consumer chooses to purchase
+- We will vastly simplify our choice set into only 2 goods
+- X\_1 = 2
+- X\_2 = 3
+
+## Slide 14: Each point represents a consumption bundle
+
+- x\_1=10, x\_2=15
+- Coffee
+- Doughnuts
+
+## Slide 15: Indifference Curves
+
+- Each axis represents the quantity of a good we consume
+- 2 axis = 2 goods
+- Indifference curve: a line on the graph that yields the same utility.
+
+## Slide 16: Different Indifference Curves
+
+- A
+- B
+- C
+- Which consumption bundle do consumers prefer the most?
+
+## Slide 17: Different Indifference Curves
+
+- A
+- B
+- C
+- Bundle B is preferred to A (B offers a higher utility than A)
+- Bundle C is indifferent to B (they yield the same utility)
+- Thus, Bundle C is preferred to A
+
+## Slide 18: Different Indifference Curves - Outwards is better
+
+- A
+- B
+- C
+
+## Slide 19: Indifference Curves Cannot Cross
+
+- A
+- B
+- C
+- D
+
+## Slide 20: PollEV
+
+## Slide 21: Indifference Curves Cannot Cross
+
+- A
+- B
+- C
+- D is preferred to A
+- B is thus preferred to A
+- C is preferred to B,
+- but A is indifferent to C
+- => This violates transitivity!
+- D
+
+## Slide 22: Indifference Curves are like Contour Maps
+
+## Slide 23: Budget Constraints
+
+- If consumers had no budget constraints, then they would always pick the infinitely rightmost curve.
+- Income
+- Price of good 1
+- Quantity of good 1
+- Price of good 2
+- Quantity of good 2
+- We will assume that consumers spend every cent they have to maximize utility.
+
+## Slide 24: Graphing the Budget Constraint
+
+- Donuts
+- Coffee
+- (M/p\_1,0)
+- (0, M/p\_2 )
+- Spend all your money on coffee
+- What we can afford
+- Spend all your money on donuts
+
+## Slide 25: Graphing the Budget Constraint
+
+- Donuts
+- Coffee
+- Less income
+- More income
+
+## Slide 26: Properties of Budget Constraints
+
+- For any given income level, the possible points to satisfy the budget constraint forms a line.
+- Slope: negative ratio of 2 prices (write x\_2 in terms of x\_1)
+- Intercepts: when only 1 good is consumed.
+
+## Slide 27: An Example
+
+- M = $5
+- P\_coffee = $2    All coffee = 2.5
+- P\_donuts = $1     All donuts = 5
+- Donuts
+- Coffee
+- (2, 1.5) also on budget constraint: 2\*1 + 1.5\*2 = 5
+
+## Slide 28: What if...
+
+- Income doubles (M = $10)?
+- Price of coffee increases to $2.5?
+- Price of donuts increases to $2?
+- How does the slope and intercepts change in each of these scenarios?
+
+## Slide 29: 1)  Income Doubles (Y=10)
+
+- 1)  Income Doubles (Y=10)
+- 2)  Price of Coffee increases (Pc=2.5)
+- 3)  Price of Donuts increases(Pd=2)
+- Donuts
+- Coffee
+
+## Slide 30: Constrained Utility Maximization
+
+- Consumers will choose the bundle that gives them the highest utility that they can afford.
+
+## Slide 31: Which Bundle Will Consumers Pick?
+
+- B
+- A
+- C
+
+## Slide 32: Which Bundle Will Consumers Pick?
+
+- B
+- A
+- C
+- Bundles
+- A and B - can afford
+- C - cannot afford
+- Utilities
+- C > B > A
+
+## Slide 33: Which Bundle Will Consumers Pick?
+
+- B
+- A
+- C
+- Consumer will choose where the indifference curve is tangent to the budget constraint
+- No point on the higher curve is affordable
+- All points on lower curve are inferior
+
+## Slide 34: Demand Curves
+
+- Change in price of a good: doughnuts
+- Hold price of Good 2 constant (coffee)
+- Hold M constant (income)
+- Vary price of Good 1 (doughnuts)
+
+## Slide 35: Red = price of doughnuts = 2$
+Blue = price of doughnuts= 1.5$
+Green = price of doughnuts = 1$
+
+- Red = price of doughnuts = 2$
+- Blue = price of doughnuts= 1.5$
+- Green = price of doughnuts = 1$
+- Donuts
+- Coffee
+
+<details><summary>Speaker notes</summary>
+
+If Y is 5$ and Price of coffee is 2$/cup  - you will always be able to buy 2.5 cups of coffee
+Red = price of good 2 = 2$
+Blue = price of good 2= 1.5$
+Green = price of good 2= 1$
+
+</details>
+
+## Slide 36: (untitled)
+
+<details><summary>Speaker notes</summary>
+
+For each of these budget lines -
+we can find the point of tangency 
+and see how much is consumed - find the quantity that corresponds to each price
+
+</details>
+
+## Slide 37: A Demand Curve is Born
+
+## Slide 38: Demand Shocks and Shifts
+
+- Hold prices of both goods to be constant
+- Income increases: budget constraint shifts, allowing us to reach a higher level of utility
+
+## Slide 39: Y= Income increases
+
+- Y= Income increases
+
+<details><summary>Speaker notes</summary>
+
+Lets look at a change in Income
+The budget line shifts out in a parallel slope
+We get to a higher indifference curve  ( more money we are happier)
+So the quantity of good 2 demanded increases from 1.2 to 1.5
+
+</details>
+
+## Slide 40: A New Demand Curve is Born
+
+## Slide 41: Scooby meme
+
+## Slide 42: Visualizing Cobb-Douglas
+
+- Check out these 3-D
+- https://data-88e.github.io/textbook/content/05-utility/utility.html
+- https://data-88e.github.io/textbook/content/05-utility/budget-constraints.html
+
+## Slide 43: For the Advanced
+
+- Lagrangian
+
+## Slide 44: Optimization
+
+- We are working on finding a local maximum for 2 goods
+- In a well defined space with mathematical properties
+  - ( Cobb Douglas)
+- What about for n - goods?
+- What about for non - convex functions?
+- A separating hyperplane?
+- What does the lambda mean?
+
+## Slide 45: Demo - Notebook for Consumer Choice - quantecon.org
+
+## Slide 46: QuantEcon Data Science in Python
+
+## Slide 47: Optimization - Scipy -
+
+## Slide 48: (untitled)
+
+## Slide 49: (untitled)
+
+## Slide 50: (untitled)
+
+## Slide 51: Why LaTeX?
+
+- We want to be able to write math equations
+- We want to format documents beautifully and ‘academically’
+- Open source, shareable, and cross platform software
+- We think it’s a good thing for you to know about
+- Economists use it
+- Economics grad students use it
+- Upper Div CS classes use it
+
+## Slide 52: There are easier approaches - hostmath.com
+
+## Slide 53: Let’s go make an overleaf account
+https://www.overleaf.com/
+
+“Sign in with Google”
+Use UC Berkeley Account
+
+## Slide 54: Overleaf - start a new file
+
+- Copy and paste text into new document on Overleaf
+- Or… download file and upload to Overleaf
+- You can upload a template
+- You can import other folks files
+- You can do all of the formatting of the file
+- Sections, Headers, Tables
+- Journal Article templates
+- Quiz and Homework templates
+
+## Slide 55: Good things to know about LaTeX
+
+- Language uses \ a lot to denote actions or unique characters
+- Everything that’s part of a symbol or function is wrapped within {}
+- E.g. \frac{5}{8} == ⅝
+- E.g. \section{This is a section header}
+
+## Slide 56: Titles and Imports
+
+- TLDR: don’t worry about these
+
+## Slide 57: Sections and Subsections
+
+- \section{<SECTION NAME>}
+- Without numbers: \section\*{<SECTION NAME>}
+
+## Slide 58: Making a List
+
+- \begin{enumerate}
+- \item …
+- \item …
+- \end{enumerate}
+
+## Slide 59: Adding Images
+
+- Put this in the title/imports:
+- \usepackage{graphicx}
+- \graphicspath{ {./images/} }
+- To add an image:
+- Make sure an images folder is created, then to include image.png:
+- \includegraphics{image.png}
+
+## Slide 60: Typesetting Equations
+
+- In-line: $<LATEX FORMULA>$
+- As its own block: there are a few ways to do this. Two of my most commonly used:
+- $$<LATEX FORMULA>$$
+- \begin{align\*}<LHS> &<OP> <RHS> \\etc.
+- \end{align\*}
+
+## Slide 61: Formulas
+
+- Let’s do four examples:
+- The quadratic formula
+- Partial Derivative:
+- Integral: 			(Does this seem familiar?)
+- Simplify 		 	   in 2 steps using align
+
+## Slide 62: You can paste this into Jupyter
+
+- For standalone formulas:
+- $$YOUR EQUATION HERE$$
+- For in-line typesetting:
+- $YOUR MATH HERE$
+
+## Slide 63: And Markdown ( bc Juptyer)
+
+- https://www.markdownguide.org/cheat-sheet/
+
+## Slide 64: Markdown - Headings
+
+## Slide 65: Markdown - Style
+
+## Slide 66: Markdown Tables
+
+## Slide 67: (untitled)
+
+## Slide 68: Edgeworth Demo
+
+- Two consumers
+- Fixed endowment of two goods
+- Indifference curves starting from different corners
+