University of Toronto Department of Economics (STG) ECO 204 2011 - 2012 Sayed Ajaz Hussain Lecture 1 © Sayed Ajaz Hussain‚ Department of Economics‚ University of Toronto‚ STG 1 Today About ECO 204 Motivational Example HBS Case: The Prestige Telephone Company Types of Optimization Methods in ECO 204 Unconstrained Optimization Evaluating change in optimal solution due to a small increase in a parameter Feedback? economics204@gmail.com © Sayed Ajaz Hussain‚ Department of Economics
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with an indifference map. Draw an indifference map with three indifference curves. b)There are a few standard assumptions about what an indifference map can and cannot look like. Which are these assumptions‚ and what reasoning lie behind them? 3. a)What is the marginal rate of substitution‚ MRS? State the definition and explain‚ in words‚ what it means. b)MRS will have an influence on the shape of the indifference curve. What influence? 4. a)Often we assume that consumers have diminishing MRS
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Department of Economics University of Toronto‚ STG 2 Today: Consumer Theory Preference relations and “Rational” preferences Commodities and Consumption set Felicity Utility functions Positive monotonic transformation Indifference Curves Marginal Rate of Substitution Feedback? economics204@gmail.com © Sayed Ajaz Hussain‚ Department of Economics University of Toronto‚ STG 3 Some Applications of Consumer Theory in ECO 204 Consumer Choice Consumer Preferences and Income
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中级微观经济学 参考书： Hal R. Varian. Intermediate Microeconomics‚ A Modern Approach. W. W. Norton & Company‚ Inc. 1 BUDGET CONSTRAINT Consumer theory ---- how consumers buy their goods? Economists assume: consumers choose the best bundle of goods they can afford. Two aspects: ----Consumers choose the most preferred goods. ----They are limited by economic condition. The Budget Constraint Consumption bundles: （消费束，商品组合）: a list of numbers of
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ANSWER SCHEME ECO551/553 APRIL 2010 QUESTION 1 a) A barter trade system is a system whereby people exchange goods for other goods. ( with example) b) There are many problems facing the barter trade. Three of these problems are: i) Double coincidence of wants ii) Rate of exchange iii) Divisibility ( with explanation) (b) The four functions of money are as follows: i) Medium of exchange ii) Unit of account iii) Store of value iv) Standard for deferred payment
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the interest/discount rates rn) from the discount factors n given above (i.e.‚ from the prices of the above zero coupon bonds). Plot these against the time to maturity t of the bonds. This is the term structure of interest rates or the yield curve based on zero coupon bonds. D. Calculate the yield to maturity (i.e.‚ the IRR) of bonds A and B assuming they trade at the prices quoted in part B. Which bond has a higher yield to maturity at these prices? Compare these to the yields of the various
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respond with a change in quantity supplied. * Suppliers cannot be picky with the price they sell their goods for * Some goods do not even have a market period (time is too short for any response) * It has a Vertical Supply Curve (meaning it is inelastic) * Price Elasticity of Supply: the Short Run (fixed-plant period): supply is more elastic‚ but not terribly so‚ as the time period is short * The period of time is not enough to change the output significantly;
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Introduction Consumer Behavior is how consumers allocate their money incomes among goods and services. Each consumer has preferences for certain of the goods and services that are available in the market. Buyers also have a good idea of how much marginal utility they will get from successive units of the various products they might purchase. However‚ the amount of marginal & total utility that the people will get will be different for every individual in the group because all individuals have
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Objectives After going through this chapter you shall be able to understand the following concepts Consumer Behaviour Theory- Ordinal Approach and Cardinal Approach Total Utility‚ Marginal Utility‚ Relationship between Total Utility and Marginal Utility Law of Diminishing Marginal Utility Utility Analysis and Consumer Equilibrium- One Good Case and Two Goods Case Consumer- Who is a Consumer? Anyone who purchases and consumes any goods and services for the satisfaction of his/her wants
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Application: Marginal Analysis of Customer Profitability Opportunity Costs Managerial Application: Opportunity Costs and V-8 Creativity of Individuals Managerial Application: Creative Gaming of the System GRAPHIC TOOLS Individual Objectives Indifference Curves Constraints Individual Choice Changes in Choice MOTIVATING HONESTY AT MERRILL LYNCH MANAGERIAL IMPLICATIONS Managerial Application: Medicare Creates Perverse Incentives for Doctors ALTERNATIVE MODELS OF BEHAVIOR Only-Money-Matters Model Happy-Is-Productive
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