Chapter 07 Consumer Behavior Multiple Choice Questions 1. Utility: A. is synonymous with usefulness. B. is want-satisfying power. C. is easy to quantify. D. rarely varies from person to person. 2. Marginal utility can be: A. positive‚ but not negative. B. positive or negative‚ but not zero. C. positive‚ negative‚ or zero. D. decreasing‚ but not negative. 4. The ability of a good or service to satisfy wants is called: A. utility maximization. B. opportunity cost
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consuming a commodity or a bundle of goods using the concept of utility. Two approaches to the concept of utility (Cardinalists and Ordinalists approach) describe how utility can be gauged. The analysis of how consumers make choices can be done using the budget constraint and indifference curves. An indifference curve shows various bundles of commodities that make the consumer equally happy‚ or give him the same level of satisfaction. Utility Defined Utility is a measure of the satisfaction that a consumer
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1.0: INTRODUCTION (UTILITY) Coca-Cola is an international brand that are consumed everyday all around the world. Statistic has shown that each day‚ more than 8 million can of Coca-Cola is being sold worldwide. However today we are not going to discuss about the secret behind Coca-Cola success. On the other hand we are going to move from production to consumer where discussion will be about the utility of Coca-Cola. Every customer has their own satisfaction level‚ and it is different with each
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all MU Relationship between TU and MU I. TU=sum of MU II. TU increases so long as MU is positive. III. When MU is zero‚ TU is maximum IV. When MU is negative‚ TU is diminishing. * The exponents of the utility analysis have developed two laws which occupy a very important place in economics theory and they are :- # Law of Diminishing Marginal Utility # Law of Equi-Marginal Utility Law of Diminishing Marginal Utility The additional benefit a person derives
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the cardinal approach 5.6 Consumer’s surplus 5.7 The ordinal utility approach to consumer behaviour: the indifference curve approach 5.8 Consumer’s budget constraint 5.9 Consumer’s equilibrium in the ordinal utility approach 5.10 Special cases 5.11 Price-consumption curve 5.12 Income-consumption curve 5.13 Price‚ substitution‚ and income effects 5.14 Derivation of the demand curve for a good 5.15 Inferior goods and Giffen goods 5.16 Let us sum up 5.17 Some key words 5.18 Some useful
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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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offered for a commodity. On the other hand the ordinal utility approach which argues that a consumer can’t measure satisfaction numerically or subjectively. The ordinal utility is also commonly known as indifference curve theory because its analysis is based on on indifference curve. Indifference curves are psychological levels of satisfaction hence are more hypothical then real. differences between these two theory are The major:- 1. In ordinal utility theory ‚ the consumer can’t
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Markets Chapter 3 Consumer Behavior Teaching Notes Now we step back from supply and demand analysis to gain a deeper understanding of what lies behind the supply and demand curves. It will help students understand where the course is heading if you explain that this chapter builds the foundation for deriving demand curves in Chapter 4‚ and that you will do the same for supply curves later in the course (beginning in Chapter 6). It is important to explain that economists approach behavior
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Micro-Economics Report of Microeconomics Submitted by: Sultan Lashari 10 2629 Submitted To: SIR MICHAEL SIMON Program: BACHELORS OF BUSINESS ADMINISTRATION FALL 2010 ------------------------------------------------- National University of Computer & Emerging Science Management
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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 → Consumer Demand Function Consumer Demand Function → Consumer Preferences → Welfare analysis Finance Portfolio allocation between a risk free asset and risky assets
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