Economics Topic 17.82.1
Love; Rationality and Income line.
Explaination by Dr. Idontink Uknow

For today's Economic lesson , we're going to look at the simple graph on a closed economy; with or without singlehood and without any other complications factors to consider such as lump-sum tax (having 2 girlfriends in one single relationship) , financial constraints nor internal and external environment pressures (your other half unable to get along with your folks- int factors, your other half don't like your friends -ext factors). Bearing those in mind , we'll now take a look at the initial setup of an individual in the considering of 2 bundles avaliable to him without any complications.

Figure 1.1 simply depicts a closed economy with only 2 bundles to consider and no other restraints. Note that Output in this case can be referred to one of these ( time, happiness, efforts, items bought etc.) Things that are not exactly in measurable terms. You get the point. In this example, we will assume the individual to be a him but the diagram is applicable to both genders. Even though Dr. Idontink refuse to type in both genders in most sentences , he's nothing close to being a sexist. (Mostly because he thinks he's some kind of Dr. and kinda snooty) Carrying on with the explanation of figure 1.1, Io in this case represents income and X1 and X2 are the output respectively.

In the short run, it can be clearly seen that the individual him/her will not have a decrease in his/her income. It's pretty obvious that by picking bundle B, getting himself attached , the individual initial income line will shift to the right as output increases from X1 to X2 but since his Io remains the same , the only main differences are the output levels. Which in this case , can be one of the many mentioned above. It can be seen that by picking bundle B, in the short run, the individual is better off as he is in a higher utility curve. (though it's not drawn)

Figure 1.2 describes the conditions in the short run against the long run. Income level at Io and output level at X1 is the choice of the individual after picking bundle B in the short run. In the long run, as more firms (other guys; hunks; jockeys; nerds etc) are trying to enter the market, the individual will have to spend more money(Io in this case) to increase the output (buy more flowers, chocs , dates , exp dinners etc) in order to maintain himself of having bundle B. Thus , resulting in the decrease of Income to Io2 and increase in output X2.


The 2 utility curves are drawn in Figure 1.2 in hoping that students will see a clearer picture of the differences in both curves. The curves have shown that in the long run , the individual is irrational in choosing bundle B. (in a lower UC curve) yet he is better than before when he chooses bundle B in the short run compared to bundle A (singlehood) shown in Figure 1.1.


In conclusion, it can be seen that an individual is only better off when he chooses bundle B over bundle A in the short run and not in the long run. Please put into considerations that this graph only describes a simple close economic where there's no govt (her/your folks) , proportional taxes (other competitions trying to run you out, resulting in more money spent to keep the patent rights; in this case; the exclusive rights to your girlfriend) and foreign firms trying to enter the market. (some other dudes from other countries trying to act cool).



Exercises for the thinkers.
1) So is the individual rational in picking bundle B in the short run or he'll be better off(staying on the same UC curve) by sticking with bundle A (singlehood)

2) Does it mean that it's better to be single(bundle A) than suffer the conditions of the long run?

3) Is the patent rights reserved and will last for at least 10years? If so , is it a wise choice for the individual to spend additional budget to preserve this 'exclusive' rights and solemly believes bundle B will continue its production no matter what(remain faithful) to him/her?







Disclaimer: The university of South Wulifornia is not responsible for any works published by Dr. Idontink Uknow in whatever manner it was re-produced, distributed or issued to anybody. However, we reserves the rights to most of his publications.(note the word MOST)



Suggested readings


Love me ? Don't be silly. by William Anothony
Till death do us part. Provided you die first and i get all the cash. by Goodman Malicam
Econs made simple. by Dr. Smkinda Foool
Foreign firms and investors trying to enter the MARKET. by Dr. Idontink Uknow
Long run. Short run. Why not Just break up and don't run? by Malcom Dannibini