Chapter 4 Individual and Market Demand Teaching Notes Chapter 4 builds on the consumer choice model presented in Chapter 3. Students find this material very abstract and “unrealistic‚” so it is important to convince them that there are good reasons for studying how consumers make purchasing decisions in some detail. Most importantly‚ we gain a deeper understanding of what lies behind demand curves and why‚ for example‚ demand curves almost always slope downward. The utility maximizing
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Econ 31514 Shenika De Silva SS/2009/087 Content 1. Introduction 2. Production 3. Stages of Production 4. Production Function 5. Production Time Periods 6. Marginal productivity Theory i. Diminishing Marginal Productivity ii. Example 1 iii. Example 2 7. References Introduction Diminishing returns‚ also called law of diminishing returns or principle of diminishing marginal productivity‚ economic law stating
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Industrial Economics Term Paper First Draft A manager has to make demand analysis‚ anticipate time value of money‚ detemine supply and demand levels‚ create a goal for his/her firm and understand the importance of profits‚ use his/her company’s products’ elsaticity tendencies before produce them in large quantities‚ maximize it’s profits and minimize production costs. A firm can be merge with another one because of profit maximization target and minimizing it’s cost. Experiences are also important
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change and how it affects the decision taking. * How demand decisions in response to price changes vary for different types of goods? * Factors influencing the elasticity of demand INTRODUCTION Governments‚ business firms‚ supermarkets‚ consumers‚ and law courts need a way to measure how responsive demand is to price changes—for example‚ will a 10 percent cut in the price of commodity X increase quantity of X demanded a little or a lot? Economists measure the responsiveness of quantity demanded
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two goods are perfect substitutes for each other. 5pennies are equivalent to a nickel. (2) You and I are in consumer equilibrium. CDs cost 10 dollars each and cassette tapes only 2 dollars each. I consume CDs and cassettes. You consume only cassettes. What can you infer about my MRS (marginal rate of substitution) of CDs and tapes? What about your MRS. Since both individuals are in consumer equilibrium‚ for you‚ the MRS should equal the price ratio since you consume both goods. Hence MRS = 10/2 =
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to those involved in economics activities which are everyone: individuals/households‚ firms/businesses and government when it comes to making these choices. It helps us when making such choices‚ from the businesses trying to make a profit to the consumers seeking to get more for less and the government trying to obtain welfare for its citizens. Economics helps us when making decisions about the allocation of such scarce resources so as to best satisfy the needs and wants of individual within an
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Consumer Behavior Audit of PartyLite Market Segmentation A. External influences 1. PartyLite products are typically bought by affluent to middle income females. The social class associated with PartyLite is either Upper Americans or Middle Class groups who holds their home’s appearance as important. 2. Although either gender can use the product‚ PartyLite products are typically purchased by females. Due to the nature of how the candles are sold‚ though in-home parties directed towards female
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190 IEEE TRANSACTIONS ON ENGINEERING MANAGEMENT‚ VOL. 46‚ NO. 2‚ MAY 1999 Price Elasticity and the Growth of Computer Spending Kar Yan Tam and Kai Lung Hui Abstract—Recent works have indicated that the price of computers is a key factor in explaining the growth of computer spending. However‚ it remains unclear whether the price elasticity of the demand for computers is constant over time. Findings on the pattern of price elasticity will have important implications in the study of information
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Economic Question 1: (a) Complete the following table of costs for a firm. (Note: enter the figures in the MC column between outputs of 0 and 1‚ 1 and 2‚ 2 and 3‚ etc.) Output (units) | TC(＄) | AC(＄) | MC(＄) | 0 | 55 | ---- | 30 | 1 | 85 | 85 | | | | | 25 | 2 | 110 | 55 | | | | | 20 | 3 | 130 | 43 | | | | | 30 | 4 | 160 | 40 | | | | | 50 | 5 | 210 | 42 | | | | | 70 | 6 | 280 | 47 | | | | | 90 | 7 | 370 | 53 | | | | | 110 | 8
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50 Chapter 5 CHOICE (Ch. 5) x2 = 20. Therefore we know that the consumer chooses the bundle (x1 ‚ x2 ) = (120‚ 20). NAME Choice Introduction. You have studied budgets‚ and you have studied preferences. Now is the time to put these two ideas together and do something with them. In this chapter you study the commodity bundle chosen by a utility-maximizing consumer from a given budget. Given prices and income‚ you know how to graph a consumer’s budget. If you also know the consumer’s
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