Demand and Supply Analysis - Consumer Demand
About the Lecture
The lecture Demand and Supply Analysis - Consumer Demand by Edu Pristine is from the course Archiv - Economics. It contains the following chapters:
- Concumer choice theory and utility theory
- Indifference curves, opportunity sets and budget constraints
- Consumer's equilibrium
- Substitution and income effects
- Normal goods and inferior goods
- Giffen and Veblen goods
Author of lecture Demand and Supply Analysis - Consumer Demand
Edu Pristine
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Excerpts from the accompanying material
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... preferences for various combination of goods and services in relation to the satisfaction these goods and services provide " The assumption of a utility function is more of a good is preferred than less " The utility function can be stated as : " Consumer ...
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... ordinal measure " Where the variables are quantities consumed of goods a through n " Its is assumed that no quantities are negative " Holding all other ...
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... sets, and budget constraints in decision making Calculate and interpret a budget ...
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... units of Y. " Indifference curve for two goods slopes downwards " Indifference curve are convex towards the origin In the figure when we move to consume more of good Y, we have tocompensate by consuming less ...
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... of substitution because the consumer moves to consume a unit of good Y, he is compensating it with more units of X Indifference curves Slope Download Good Y Slope of the indifference curve ...
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... cannot cross " The figure shows how two indifference curves cross each other " Two indifference curves for a given individual cannot cross because the transitivity assumption is violated " That is if ...
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... he chooses between the good s available to him " Suppose a person has a income of $100, he can either b uy good X priced at $10 or good Y priced at $20 or a ...
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... P Y= $20 " This combination can be shown by the budget line 6 10 Units ...
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... to $140, there is a shift in budget as he can afford more of good X and good Y " If the price of good ...
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... substitution B. A decreasing marginal rate of substitution C. ...
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... the slope (the MRS) decreases as you move down it. The reason is that when you have a relatively large amount of one good (e.g. good Y) and not much of the other (good X), you are willing to give up a lot of good Y to get one more unit of good X. But as you gradually give up Y in return for X the amount of Y you are willing to substitute for X gets smaller and smaller. ...
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... " Fred divides his purchases between beer and pizzas. Suppose Fred's budget constraint is graphed with beer on the horizontal axis and pizzas on the vertical axis. If the pri ce of beer is $1.50 per pint, the price of ...
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... more unit of the other. The slope is calculated as the price of the good on the horizontal axis divided by the price of the good on the vertical axis. So here it is the price of beer divided by the price of pizzas; i.e. 1.50/2.00 = 0.75 (the minus sign in the answers simply indicates that the budget line is negatively ...
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... Determine a consumer ...
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... " Jonathon's preferences satisfy the non-satiation assumption. This means that he must prefer the bundle consisting of t wo glasses of orange juice and one sandwich to which of the following bundles? A. Two glasses ...
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... less of the other than another bundle the individual will prefer this bundle to the other. So here only bundle c is definitely less preferred to the bundle consisting of two glasses of orange juice and one sandwich ...
