Brett Robson wrote:
> 
> Declan Murphy wrote:
> 
>> So far he has had free tuition on marginal utility, opportunity cost, 
>> the role of central banks, exchange rate regimes & aggregate demand, 
> 
> When we learnt marginal utility the scenario was beer and pizza, you can 
> have 10 pizzas or 10 beers. 5en would have been sitting there thinking 
> 10 pizzas or 10 beers, why do I have to choose, I want both.

You do not have to choose. You can have both. To enjoy 10 beers and 10 
pizzas (or 10 pizzas and 10 beers for the pedantic) the consumer simply 
(laugh) needs to establish a new indifference curve. To do this you need 
to establish a new (larger) budget constraint. Bon appetit.

Naturally the dismal science also predicts that with 10 beers and 10 
pizzas you would be drunker but not happier, since with the new 
indifference curve you would be trading off the option of 20 beers and 0 
pizza, or 20 pizzas and 0 beers, or some point in between on the new 
curve. All other factors being equal, no externalities and transaction 
costs equal to zero.


-- 
Non gratum anus rodentum