Ajaz Hussain‚ 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
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Individual Behavior Michael R. Baye‚ Managerial Economics and Business Strategy‚ 6e. ©The McGraw-Hill Companies‚ Inc.‚ 2008 Overview I. Consumer Behavior Indifference Curve Analysis Consumer Preference Ordering II. Constraints The Budget Constraint Changes in Income Changes in Prices III. Consumer Equilibrium IV. Indifference Curve Analysis & Demand Curves Individual Demand Market Demand Michael R. Baye‚ Managerial Economics and Business Strategy‚ 6e. ©The McGraw-Hill Companies‚ Inc
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colony “wears a mask”‚ and “his face grows to fit it” (par. 7). The officer finds that he must be indifferent to who he really is to keep control. By the end of the story‚ it is evident that the indifference towards values and identity has become the norm in the colonies; the realization that this indifference hurts the colonizers as much as the colonized is what brings about the downfall of
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Section 3 1- The word "utility" means a) quantity demanded. c) demand. b) benefit or satisfaction. d) goal. 2- The benefit that John gets from eating an additional grape is called the a) quantity demanded. c) demand. b) total utility. d) marginal utility. 3- Marginal utility is the change in total utility that results from a) an increase in the consumer’s income. b) a one-unit change in the quantity of a good consumed. c) a decrease in the price of the good. d) an
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antibacterial activity against gram positive and gram negative bacteria (standard strains and clinical isolates). Antibacterial activity was tested on E. coli‚ S. aureus‚ B. subtilis and P. aeruginosa. Results show that there was no formation of any zone of inhibition as observed after 24 hrs. Thus‚ this justifies the traditional use of the plant as decoction treatment for various ailments. Various concentrations of crude extracts diluted in distilled water were also tested for comparison purposes
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slope? What does the slope of the budget line equal? d) What is an indifference curve? e) Why do consumers prefer higher indifference curves (farther to the right) to lower indifference curves? f) In an indifference curve/budget line framework‚ how does a consumer decide which of all possible combinations of goods to purchase? g) Describe the consumer equilibrium in the indifference curve/budget line model. h) In a budget line/indifference curve figure‚ how do you identify the best affordable combination
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consumer’s budget constraint. b. has no effect on the slope of the consumer’s budget constraint. c. decreases the slope of the consumer’s budget constraint. d. has no effect on the consumer’s budget constraint. ANS: B 6. The following diagram shows one indifference curve representing the preferences for goods X and Y for one consumer. Figure 21-2 Refer to Figure 21-2.What is the marginal rate of substitution between points A and B? a.
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5. An indifference curve shows: a. the one most desirable portfolio for a particular investor. b. all combinations of portfolios that are equally desirable to a particular investor. c. all combinations of portfolios that are equally desirable to all investors. d. the one most desirable portfolio for all investors. 6. Which of the following statements regarding indifference curves is not true? a. Investors have a finite number of indifference curves. b.
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1. PRINCIPES OF ECONOMICS-MANKIEW CHAPTER 1- QUESTION FOR REVIEW (18) No 3. What is inflation and what causes it? = Inflation is an increase in the overall level of prices in the economy. Inflation happen because culprit is growth in the quantity o money when a government creates larges quantities of the nation’s money‚ the value of the money. No 5. Explain the two main causes of market failure and give an example of each! = Externality‚ is the impact of one person’s action on the well being
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substitute (Marginal Rate of Substitution) Slope of indifference curve= the amount of a product that must be substitute for another if utility is to remain unchanged. The ratio is the marginal rate of substitution. The MRS is the slope of the indifference curve at a certain point. I spend my money on the product that gave the most marginal utility. Ex: How much X do I have to give to get an extra unit of Y ? Example of indifference curves= If my MRS does not depend on
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