This document provides an overview of key concepts in consumer choice theory and utility maximization. It defines key terms like utility, total utility, marginal utility, and the law of diminishing marginal utility. It explains that consumers seek to maximize total utility subject to a budget constraint by allocating spending so that the marginal utility per dollar is equal across goods, known as consumer equilibrium. It also discusses the income and substitution effects that explain how changes in price result in changes to the quantity demanded in accordance with the law of demand.
This document summarizes key concepts related to marginal utility and consumer choice. It defines marginal utility as the additional satisfaction gained from consuming one more unit of a good. The law of diminishing marginal utility states that marginal utility declines as consumption increases. A rational consumer seeks to maximize total utility by equalizing the marginal utility per dollar spent (MU/P ratio) on each good. When price decreases, quantity demanded increases as MU/P rises. The marginal utility approach explains consumer demand and the creation of consumer surplus from market transactions. While exact comparisons of utility across individuals are not possible, approximate comparisons are necessary to evaluate some economic policies.
Unit 03. Consumers Equilibrium The theory of Consumers Behavior .pptsadiqfarhan2
1) The document discusses consumer theory and how consumers make choices given limited incomes and utility maximization. It explains concepts like utility, marginal utility, total utility, budget constraints, and indifference curves.
2) Consumers derive utility from consuming goods and face diminishing marginal utility. They aim to maximize total utility subject to their budget.
3) When prices change, consumers adjust their consumption to equalize marginal utility per dollar spent on different goods, through income and substitution effects. This is shown through demand curves, budget lines, and indifference curves.
The document summarizes key concepts from consumer choice theory in economics. It discusses the concepts of utility, total utility, marginal utility, diminishing marginal utility, and consumer equilibrium. It explains that consumer equilibrium occurs when the marginal utility per dollar is equal for all goods purchased. This can be used to derive the downward-sloping demand curve, as when price falls, consumption increases to restore equilibrium. The income and substitution effects are also summarized as complementary explanations for the law of demand. When price decreases, these effects work together to increase the quantity demanded.
This document discusses consumer theory and how consumers make choices given income constraints. It explains that consumers seek to maximize their utility by evaluating and comparing goods based on the satisfaction or "utility" they provide. Consumers face budget constraints and within those limits choose goods that optimize their total utility based on the marginal utility of each additional unit. The document outlines the basic assumptions about rational consumers and explores concepts like indifference curves, budget constraints, demand curves, consumer surplus, and how prices impact consumption choices through income and substitution effects.
Theory of consumer behavior cardinal approachTej Kiran
This document discusses consumer behavior theory and how consumers make choices under income constraints. It explains that consumers seek to maximize their utility, or satisfaction, from consuming goods and services. Utility is defined as the pleasure or satisfaction derived from consumption. Consumers are constrained by their incomes and must make choices within these limits. The concepts of total utility, marginal utility, diminishing marginal utility, and how consumers allocate their budgets to maximize utility are introduced. Cardinal and ordinal approaches to measuring utility are also outlined. The document provides examples and explanations of the law of diminishing marginal utility and the principle of equimarginal utility as consumers seek to optimize their satisfaction from consumption.
This document provides a multiple choice tutorial on consumer choice and demand. It includes 36 multiple choice questions that cover topics like the substitution effect, normal and inferior goods, utility, marginal utility, total utility, demand curves, consumer surplus, elasticity, and the components of the cost of consumption. The questions are designed to teach about key economic concepts related to consumer behavior and how consumers maximize their utility subject to budget constraints.
1. The document discusses consumer behavior and the law of demand from a microeconomics textbook chapter. It explains how consumers maximize their utility given budget constraints.
2. The law of diminishing marginal utility and consumers seeking to equalize marginal utility per dollar spent across goods explains consumer demand patterns.
3. Examples like the shift from LPs to CDs and the diamond-water paradox illustrate how changes in prices and marginal utility analysis impact consumer choices.
2022 The Theory of Utility .New ppt.pptxJQuanBruce
The document discusses the theory of consumer demand and utility theory. It explains that consumers seek to maximize utility given their budget constraints. There are two approaches to utility - the cardinal and ordinal approaches. The cardinal approach measures utility in "utils" while the ordinal only ranks preferences. The theory of marginal utility states that additional units of a good provide diminishing marginal utility. Consumers seek to equalize marginal utility per dollar across all goods purchased to achieve equilibrium. If the price of a good changes, consumption will adjust until equilibrium is restored.
This document summarizes key concepts related to marginal utility and consumer choice. It defines marginal utility as the additional satisfaction gained from consuming one more unit of a good. The law of diminishing marginal utility states that marginal utility declines as consumption increases. A rational consumer seeks to maximize total utility by equalizing the marginal utility per dollar spent (MU/P ratio) on each good. When price decreases, quantity demanded increases as MU/P rises. The marginal utility approach explains consumer demand and the creation of consumer surplus from market transactions. While exact comparisons of utility across individuals are not possible, approximate comparisons are necessary to evaluate some economic policies.
Unit 03. Consumers Equilibrium The theory of Consumers Behavior .pptsadiqfarhan2
1) The document discusses consumer theory and how consumers make choices given limited incomes and utility maximization. It explains concepts like utility, marginal utility, total utility, budget constraints, and indifference curves.
2) Consumers derive utility from consuming goods and face diminishing marginal utility. They aim to maximize total utility subject to their budget.
3) When prices change, consumers adjust their consumption to equalize marginal utility per dollar spent on different goods, through income and substitution effects. This is shown through demand curves, budget lines, and indifference curves.
The document summarizes key concepts from consumer choice theory in economics. It discusses the concepts of utility, total utility, marginal utility, diminishing marginal utility, and consumer equilibrium. It explains that consumer equilibrium occurs when the marginal utility per dollar is equal for all goods purchased. This can be used to derive the downward-sloping demand curve, as when price falls, consumption increases to restore equilibrium. The income and substitution effects are also summarized as complementary explanations for the law of demand. When price decreases, these effects work together to increase the quantity demanded.
This document discusses consumer theory and how consumers make choices given income constraints. It explains that consumers seek to maximize their utility by evaluating and comparing goods based on the satisfaction or "utility" they provide. Consumers face budget constraints and within those limits choose goods that optimize their total utility based on the marginal utility of each additional unit. The document outlines the basic assumptions about rational consumers and explores concepts like indifference curves, budget constraints, demand curves, consumer surplus, and how prices impact consumption choices through income and substitution effects.
Theory of consumer behavior cardinal approachTej Kiran
This document discusses consumer behavior theory and how consumers make choices under income constraints. It explains that consumers seek to maximize their utility, or satisfaction, from consuming goods and services. Utility is defined as the pleasure or satisfaction derived from consumption. Consumers are constrained by their incomes and must make choices within these limits. The concepts of total utility, marginal utility, diminishing marginal utility, and how consumers allocate their budgets to maximize utility are introduced. Cardinal and ordinal approaches to measuring utility are also outlined. The document provides examples and explanations of the law of diminishing marginal utility and the principle of equimarginal utility as consumers seek to optimize their satisfaction from consumption.
This document provides a multiple choice tutorial on consumer choice and demand. It includes 36 multiple choice questions that cover topics like the substitution effect, normal and inferior goods, utility, marginal utility, total utility, demand curves, consumer surplus, elasticity, and the components of the cost of consumption. The questions are designed to teach about key economic concepts related to consumer behavior and how consumers maximize their utility subject to budget constraints.
1. The document discusses consumer behavior and the law of demand from a microeconomics textbook chapter. It explains how consumers maximize their utility given budget constraints.
2. The law of diminishing marginal utility and consumers seeking to equalize marginal utility per dollar spent across goods explains consumer demand patterns.
3. Examples like the shift from LPs to CDs and the diamond-water paradox illustrate how changes in prices and marginal utility analysis impact consumer choices.
2022 The Theory of Utility .New ppt.pptxJQuanBruce
The document discusses the theory of consumer demand and utility theory. It explains that consumers seek to maximize utility given their budget constraints. There are two approaches to utility - the cardinal and ordinal approaches. The cardinal approach measures utility in "utils" while the ordinal only ranks preferences. The theory of marginal utility states that additional units of a good provide diminishing marginal utility. Consumers seek to equalize marginal utility per dollar across all goods purchased to achieve equilibrium. If the price of a good changes, consumption will adjust until equilibrium is restored.
1. The document discusses consumer behavior and how consumers maximize their utility given budget constraints. It explains the concepts of total utility, marginal utility, and how consumers allocate their income across different goods.
2. It provides examples to illustrate these concepts, such as how changes in prices and incomes affect consumer choices. It also discusses how time is a factor in utility maximization.
3. The document concludes by discussing how the theory of consumer behavior can provide insights into criminal behavior, where criminals also weigh the costs and benefits of their actions.
This document provides an overview of consumer surplus, including its definition, measurement, and applications. Consumer surplus is defined as the difference between the maximum price consumers are willing to pay for a good and the actual market price they pay. It can be measured as the area below the demand curve and above the market price. While consumer surplus generally declines with consumption due to diminishing marginal utility, it provides a measure of economic welfare. The concept of consumer surplus has practical applications in international trade, business pricing strategies, and public policy decisions.
This document discusses consumer choice theory and the concept of indifference curves. It covers several key topics:
1) Consumers seek to maximize satisfaction by equalizing the marginal utility per unit of expenditure across all goods purchased, given prices and income constraints.
2) Indifference curves depict combinations of goods that provide equal satisfaction or utility to the consumer.
3) A budget constraint shows the combinations of goods that can be purchased given income levels. Consumers optimize by choosing the highest indifference curve possible within their budget set.
This document provides an overview of indifference theory and consumer choice. It discusses key concepts such as:
- Consumers maximize satisfaction when the marginal utility per unit of expenditure is equal for all goods.
- Indifference curves show combinations of goods that provide the same satisfaction.
- A budget constraint limits what can be purchased with a given income.
- Consumers optimize by reaching the highest indifference curve possible given their budget.
- Marginal utility diminishes as consumption increases, so consumers equalize marginal utility per expenditure to maximize total utility.
The document discusses consumer theory and how consumers make choices given income constraints. It defines utility as the satisfaction derived from consuming goods and services. Consumers aim to maximize utility within their budgets by comparing the marginal utility of goods. Marginal utility diminishes as consumption of a good increases. The document provides examples to illustrate total utility, marginal utility, and how consumers determine optimal consumption levels of different goods based on marginal utility comparisons and income constraints.
The document discusses theories of consumer choice, including the cardinal and ordinal approaches. It provides details on:
- The cardinal approach, also known as the law of diminishing marginal utility, which assumes utility can be measured and that marginal utility decreases with increasing consumption.
- Indifference curves and marginal rate of substitution, which are tools of the ordinal approach that does not measure utility directly but rather analyzes consumer preferences.
- Assumptions of both approaches, such as consumers rationally substituting goods to maximize satisfaction and preferences being consistent.
- Concepts like consumer surplus, which is the difference between what a consumer would be willing and able to pay for a good or service.
Macro Economics
For downloading this contact- bikashkumar.bk100@gmail.com
Prepared by Students of University of Rajshahi
Tonmoy Halder
Shopna Akter
Bipul Chandra
Mamunur Rahaman
Siam Hossain
Jibon Rahman
1. Consumer behavior involves how individuals make purchase decisions to satisfy needs and wants given limited resources. A consumer aims to maximize utility or satisfaction from consuming goods.
2. The budget constraint, also known as the budget line, shows the maximum combination of goods a consumer can purchase given prices and income. It represents the trade-offs or opportunity costs faced by consumers.
3. The law of diminishing marginal utility states that as consumption of a good increases, the marginal utility of each additional unit decreases. This explains why demand curves slope downward and why consumers make rational purchase decisions.
This document provides an overview of utility analysis and consumer behavior theory. It discusses key concepts like demand, utility, marginal utility, total utility, consumer surplus, and indifference curves. Specifically, it defines utility as the satisfaction received from consuming a good or service. It explains that utility is subjective and hard to measure directly. The document also outlines the laws of diminishing marginal utility and different approaches to measuring utility, including cardinal and ordinal measurement. Finally, it introduces concepts like marginal utility analysis, indifference curves, and consumer surplus that are important tools for understanding consumer choice.
This document discusses microeconomics and consumer behavior topics including utility maximization, demand, and consumer choice. It defines key concepts like total utility, marginal utility, and the law of diminishing marginal utility. It provides examples to illustrate these concepts and how consumers make choices to maximize their utility subject to budget constraints. Rational consumers will allocate their limited income between goods in a way that equalizes the marginal utility per dollar between each good. The document also discusses substitution and income effects that occur when prices change.
Bba 1 be 1 u-3 consumer behavior and demand analysisBhavik Panchal
This document provides information about consumer behavior and demand analysis. It defines key concepts like utility, total utility, marginal utility, law of diminishing marginal utility, and law of equi-marginal utility. It explains how consumers aim to maximize total utility given budget constraints. Indifference curves and marginal rate of substitution are introduced to graphically represent consumer preferences. Consumer equilibrium occurs where the budget line is tangent to the highest indifference curve, allowing consumers to obtain maximum satisfaction from their income.
Bba 1 be 1 u-3 consumer behavior and demand analysisRai University
This document provides information about consumer behavior and demand analysis. It defines key concepts like utility, total utility, marginal utility, indifference curves, and consumer equilibrium. Utility refers to the satisfaction received from consuming goods and services. The law of diminishing marginal utility states that utility from successive units of consumption declines. Indifference curves represent combinations of goods that provide equal utility to the consumer. Consumer equilibrium occurs where the budget line is tangent to the highest indifference curve, allowing maximum satisfaction from the consumer's income.
This document discusses concepts related to cardinal utility theory, including:
- The definition of utility and assumptions of cardinal utility theory
- The concepts of total utility, marginal utility, and the law of diminishing marginal utility
- Assumptions of the law of equi-marginal utility and how it relates to consumer equilibrium
- Determinants of consumer equilibrium like substitution and income effects from price changes
- Indifference curves and how they relate to budget constraints and consumer optimization
- The meaning of consumer surplus as the excess utility consumers receive over their total expenditures.
This document provides an introduction to concepts related to consumer behavior and utility theory in economics. It defines total utility as the utility derived from consuming a good, and marginal utility as the change in total utility from consuming one additional unit of a good. It describes the law of diminishing marginal utility, which states that marginal utility declines as consumption increases. The document uses examples to illustrate the shapes of total and marginal utility curves. It then explains how consumers seek to maximize utility subject to their budget by equating marginal utility per dollar across goods. This leads to the concept of consumer equilibrium. Finally, it defines consumer surplus as the difference between what consumers are willing to pay and the actual price paid.
1. The document discusses concepts related to consumer choice theory including utility, total utility, marginal utility, budget constraints, indifference curves, and how consumer choices are impacted by changes in income and prices.
2. It provides illustrations of budget constraints, indifference curves, and how consumers optimize their choices of goods at the point where the highest indifference curve is tangent to the budget constraint.
3. It also explains how increases in income shift the budget constraint outward, allowing consumers to consume more goods, and how decreases in price rotate the budget constraint outward and impact substitution between goods.
This document provides an overview of the cardinal utility theory approach to analyzing consumer behavior. It defines key concepts like total utility, marginal utility, diminishing marginal utility, and equi-marginal utility. Total utility is the satisfaction from consuming different quantities of a good, while marginal utility is the change in total utility from an additional unit. The law of diminishing marginal utility states that marginal utility declines as consumption increases. Consumer equilibrium is reached when marginal utility per unit of expenditure is equal across goods, as described by the law of equi-marginal utility. Utility is subjective and depends on individual preferences and circumstances.
This document discusses marginal utility analysis and consumer behavior theory. It defines key concepts like total utility, marginal utility, diminishing marginal utility, and explains how consumers seek to maximize utility given budget constraints. The document also discusses how consumers reach equilibrium when purchasing multiple goods, where the marginal utility per rupee is equal across goods. It shows how demand curves can be derived from marginal utility curves and outlines some limitations of the marginal utility approach.
This document discusses consumer behavior theory and the two approaches to understanding consumer utility - the cardinal and ordinal approaches. It explains key concepts like total utility, marginal utility, indifference curves, and the conditions for consumer equilibrium. The cardinal approach uses measurements of utility to analyze concepts like diminishing marginal utility and the law of equi-marginal utility. The ordinal approach uses indifference curves and budget constraints to show consumer equilibrium without measuring exact utility amounts.
Utility refers to the satisfaction or benefit derived from consuming a good. The law of diminishing marginal utility states that as consumption of a good increases, the marginal utility of each additional unit decreases. The law of equi-marginal utility extends this to consumption of multiple goods, stating that a consumer will allocate their budget in a way that equalizes the marginal utility across goods. This occurs when a consumer spends their money in a way that maximizes total utility subject to their budget constraint.
This document discusses key concepts in consumer theory, including utility, cardinal and ordinal utility, marginal utility, total utility, the law of diminishing marginal utility, and the law of equi-marginal utility. Utility refers to the satisfaction derived from consuming a good and is subjective in nature. The law of diminishing marginal utility states that the marginal utility derived from additional units of consumption decreases as consumption increases. The law of equi-marginal utility holds that consumers allocate their budget in a way that equalizes the marginal utility across goods consumed to maximize total utility.
In a tight labour market, job-seekers gain bargaining power and leverage it into greater job quality—at least, that’s the conventional wisdom.
Michael, LMIC Economist, presented findings that reveal a weakened relationship between labour market tightness and job quality indicators following the pandemic. Labour market tightness coincided with growth in real wages for only a portion of workers: those in low-wage jobs requiring little education. Several factors—including labour market composition, worker and employer behaviour, and labour market practices—have contributed to the absence of worker benefits. These will be investigated further in future work.
1. The document discusses consumer behavior and how consumers maximize their utility given budget constraints. It explains the concepts of total utility, marginal utility, and how consumers allocate their income across different goods.
2. It provides examples to illustrate these concepts, such as how changes in prices and incomes affect consumer choices. It also discusses how time is a factor in utility maximization.
3. The document concludes by discussing how the theory of consumer behavior can provide insights into criminal behavior, where criminals also weigh the costs and benefits of their actions.
This document provides an overview of consumer surplus, including its definition, measurement, and applications. Consumer surplus is defined as the difference between the maximum price consumers are willing to pay for a good and the actual market price they pay. It can be measured as the area below the demand curve and above the market price. While consumer surplus generally declines with consumption due to diminishing marginal utility, it provides a measure of economic welfare. The concept of consumer surplus has practical applications in international trade, business pricing strategies, and public policy decisions.
This document discusses consumer choice theory and the concept of indifference curves. It covers several key topics:
1) Consumers seek to maximize satisfaction by equalizing the marginal utility per unit of expenditure across all goods purchased, given prices and income constraints.
2) Indifference curves depict combinations of goods that provide equal satisfaction or utility to the consumer.
3) A budget constraint shows the combinations of goods that can be purchased given income levels. Consumers optimize by choosing the highest indifference curve possible within their budget set.
This document provides an overview of indifference theory and consumer choice. It discusses key concepts such as:
- Consumers maximize satisfaction when the marginal utility per unit of expenditure is equal for all goods.
- Indifference curves show combinations of goods that provide the same satisfaction.
- A budget constraint limits what can be purchased with a given income.
- Consumers optimize by reaching the highest indifference curve possible given their budget.
- Marginal utility diminishes as consumption increases, so consumers equalize marginal utility per expenditure to maximize total utility.
The document discusses consumer theory and how consumers make choices given income constraints. It defines utility as the satisfaction derived from consuming goods and services. Consumers aim to maximize utility within their budgets by comparing the marginal utility of goods. Marginal utility diminishes as consumption of a good increases. The document provides examples to illustrate total utility, marginal utility, and how consumers determine optimal consumption levels of different goods based on marginal utility comparisons and income constraints.
The document discusses theories of consumer choice, including the cardinal and ordinal approaches. It provides details on:
- The cardinal approach, also known as the law of diminishing marginal utility, which assumes utility can be measured and that marginal utility decreases with increasing consumption.
- Indifference curves and marginal rate of substitution, which are tools of the ordinal approach that does not measure utility directly but rather analyzes consumer preferences.
- Assumptions of both approaches, such as consumers rationally substituting goods to maximize satisfaction and preferences being consistent.
- Concepts like consumer surplus, which is the difference between what a consumer would be willing and able to pay for a good or service.
Macro Economics
For downloading this contact- bikashkumar.bk100@gmail.com
Prepared by Students of University of Rajshahi
Tonmoy Halder
Shopna Akter
Bipul Chandra
Mamunur Rahaman
Siam Hossain
Jibon Rahman
1. Consumer behavior involves how individuals make purchase decisions to satisfy needs and wants given limited resources. A consumer aims to maximize utility or satisfaction from consuming goods.
2. The budget constraint, also known as the budget line, shows the maximum combination of goods a consumer can purchase given prices and income. It represents the trade-offs or opportunity costs faced by consumers.
3. The law of diminishing marginal utility states that as consumption of a good increases, the marginal utility of each additional unit decreases. This explains why demand curves slope downward and why consumers make rational purchase decisions.
This document provides an overview of utility analysis and consumer behavior theory. It discusses key concepts like demand, utility, marginal utility, total utility, consumer surplus, and indifference curves. Specifically, it defines utility as the satisfaction received from consuming a good or service. It explains that utility is subjective and hard to measure directly. The document also outlines the laws of diminishing marginal utility and different approaches to measuring utility, including cardinal and ordinal measurement. Finally, it introduces concepts like marginal utility analysis, indifference curves, and consumer surplus that are important tools for understanding consumer choice.
This document discusses microeconomics and consumer behavior topics including utility maximization, demand, and consumer choice. It defines key concepts like total utility, marginal utility, and the law of diminishing marginal utility. It provides examples to illustrate these concepts and how consumers make choices to maximize their utility subject to budget constraints. Rational consumers will allocate their limited income between goods in a way that equalizes the marginal utility per dollar between each good. The document also discusses substitution and income effects that occur when prices change.
Bba 1 be 1 u-3 consumer behavior and demand analysisBhavik Panchal
This document provides information about consumer behavior and demand analysis. It defines key concepts like utility, total utility, marginal utility, law of diminishing marginal utility, and law of equi-marginal utility. It explains how consumers aim to maximize total utility given budget constraints. Indifference curves and marginal rate of substitution are introduced to graphically represent consumer preferences. Consumer equilibrium occurs where the budget line is tangent to the highest indifference curve, allowing consumers to obtain maximum satisfaction from their income.
Bba 1 be 1 u-3 consumer behavior and demand analysisRai University
This document provides information about consumer behavior and demand analysis. It defines key concepts like utility, total utility, marginal utility, indifference curves, and consumer equilibrium. Utility refers to the satisfaction received from consuming goods and services. The law of diminishing marginal utility states that utility from successive units of consumption declines. Indifference curves represent combinations of goods that provide equal utility to the consumer. Consumer equilibrium occurs where the budget line is tangent to the highest indifference curve, allowing maximum satisfaction from the consumer's income.
This document discusses concepts related to cardinal utility theory, including:
- The definition of utility and assumptions of cardinal utility theory
- The concepts of total utility, marginal utility, and the law of diminishing marginal utility
- Assumptions of the law of equi-marginal utility and how it relates to consumer equilibrium
- Determinants of consumer equilibrium like substitution and income effects from price changes
- Indifference curves and how they relate to budget constraints and consumer optimization
- The meaning of consumer surplus as the excess utility consumers receive over their total expenditures.
This document provides an introduction to concepts related to consumer behavior and utility theory in economics. It defines total utility as the utility derived from consuming a good, and marginal utility as the change in total utility from consuming one additional unit of a good. It describes the law of diminishing marginal utility, which states that marginal utility declines as consumption increases. The document uses examples to illustrate the shapes of total and marginal utility curves. It then explains how consumers seek to maximize utility subject to their budget by equating marginal utility per dollar across goods. This leads to the concept of consumer equilibrium. Finally, it defines consumer surplus as the difference between what consumers are willing to pay and the actual price paid.
1. The document discusses concepts related to consumer choice theory including utility, total utility, marginal utility, budget constraints, indifference curves, and how consumer choices are impacted by changes in income and prices.
2. It provides illustrations of budget constraints, indifference curves, and how consumers optimize their choices of goods at the point where the highest indifference curve is tangent to the budget constraint.
3. It also explains how increases in income shift the budget constraint outward, allowing consumers to consume more goods, and how decreases in price rotate the budget constraint outward and impact substitution between goods.
This document provides an overview of the cardinal utility theory approach to analyzing consumer behavior. It defines key concepts like total utility, marginal utility, diminishing marginal utility, and equi-marginal utility. Total utility is the satisfaction from consuming different quantities of a good, while marginal utility is the change in total utility from an additional unit. The law of diminishing marginal utility states that marginal utility declines as consumption increases. Consumer equilibrium is reached when marginal utility per unit of expenditure is equal across goods, as described by the law of equi-marginal utility. Utility is subjective and depends on individual preferences and circumstances.
This document discusses marginal utility analysis and consumer behavior theory. It defines key concepts like total utility, marginal utility, diminishing marginal utility, and explains how consumers seek to maximize utility given budget constraints. The document also discusses how consumers reach equilibrium when purchasing multiple goods, where the marginal utility per rupee is equal across goods. It shows how demand curves can be derived from marginal utility curves and outlines some limitations of the marginal utility approach.
This document discusses consumer behavior theory and the two approaches to understanding consumer utility - the cardinal and ordinal approaches. It explains key concepts like total utility, marginal utility, indifference curves, and the conditions for consumer equilibrium. The cardinal approach uses measurements of utility to analyze concepts like diminishing marginal utility and the law of equi-marginal utility. The ordinal approach uses indifference curves and budget constraints to show consumer equilibrium without measuring exact utility amounts.
Utility refers to the satisfaction or benefit derived from consuming a good. The law of diminishing marginal utility states that as consumption of a good increases, the marginal utility of each additional unit decreases. The law of equi-marginal utility extends this to consumption of multiple goods, stating that a consumer will allocate their budget in a way that equalizes the marginal utility across goods. This occurs when a consumer spends their money in a way that maximizes total utility subject to their budget constraint.
This document discusses key concepts in consumer theory, including utility, cardinal and ordinal utility, marginal utility, total utility, the law of diminishing marginal utility, and the law of equi-marginal utility. Utility refers to the satisfaction derived from consuming a good and is subjective in nature. The law of diminishing marginal utility states that the marginal utility derived from additional units of consumption decreases as consumption increases. The law of equi-marginal utility holds that consumers allocate their budget in a way that equalizes the marginal utility across goods consumed to maximize total utility.
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In a tight labour market, job-seekers gain bargaining power and leverage it into greater job quality—at least, that’s the conventional wisdom.
Michael, LMIC Economist, presented findings that reveal a weakened relationship between labour market tightness and job quality indicators following the pandemic. Labour market tightness coincided with growth in real wages for only a portion of workers: those in low-wage jobs requiring little education. Several factors—including labour market composition, worker and employer behaviour, and labour market practices—have contributed to the absence of worker benefits. These will be investigated further in future work.
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Financial Assets: Debit vs Equity Securities.pptxWrito-Finance
financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
Debt Securities are Also known as fixed-income securities or instruments. The type of assets is formed by establishing contracts between investor and issuer of the asset.
• The first type of Debit securities is BONDS. Bonds are issued by corporations and government (both local and national government).
• The second important type of Debit security is NOTES. Apart from similarities associated with notes and bonds, notes have shorter term maturity.
• The 3rd important type of Debit security is TRESURY BILLS. These securities have short-term ranging from three months, six months, and one year. Issuer of such securities are governments.
• Above discussed debit securities are mostly issued by governments and corporations. CERTIFICATE OF DEPOSITS CDs are issued by Banks and Financial Institutions. Risk factor associated with CDs gets reduced when issued by reputable institutions or Banks.
Following are the risk attached with debt securities: Credit risk, interest rate risk and currency risk
There are no fixed maturity dates in such securities, and asset’s value is determined by company’s performance. There are two major types of equity securities: common stock and preferred stock.
Common Stock: These are simple equity securities and bear no complexities which the preferred stock bears. Holders of such securities or instrument have the voting rights when it comes to select the company’s board of director or the business decisions to be made.
Preferred Stock: Preferred stocks are sometime referred to as hybrid securities, because it contains elements of both debit security and equity security. Preferred stock confers ownership rights to security holder that is why it is equity instrument
<a href="https://www.writofinance.com/equity-securities-features-types-risk/" >Equity securities </a> as a whole is used for capital funding for companies. Companies have multiple expenses to cover. Potential growth of company is required in competitive market. So, these securities are used for capital generation, and then uses it for company’s growth.
Concluding remarks
Both are employed in business. Businesses are often established through debit securities, then what is the need for equity securities. Companies have to cover multiple expenses and expansion of business. They can also use equity instruments for repayment of debits. So, there are multiple uses for securities. As an investor, you need tools for analysis. Investment decisions are made by carefully analyzing the market. For better analysis of the stock market, investors often employ financial analysis of companies.
Seminar: Gender Board Diversity through Ownership NetworksGRAPE
Seminar on gender diversity spillovers through ownership networks at FAME|GRAPE. Presenting novel research. Studies in economics and management using econometrics methods.
Lecture slide titled Fraud Risk Mitigation, Webinar Lecture Delivered at the Society for West African Internal Audit Practitioners (SWAIAP) on Wednesday, November 8, 2023.
1. Elemental Economics - Introduction to mining.pdfNeal Brewster
After this first you should: Understand the nature of mining; have an awareness of the industry’s boundaries, corporate structure and size; appreciation the complex motivations and objectives of the industries’ various participants; know how mineral reserves are defined and estimated, and how they evolve over time.
OJP data from firms like Vicinity Jobs have emerged as a complement to traditional sources of labour demand data, such as the Job Vacancy and Wages Survey (JVWS). Ibrahim Abuallail, PhD Candidate, University of Ottawa, presented research relating to bias in OJPs and a proposed approach to effectively adjust OJP data to complement existing official data (such as from the JVWS) and improve the measurement of labour demand.
2. 2
In this chapter, you will
learn to solve these
economic puzzles:
Under what conditions might
you be willing to pay
$10,000 for a gallon of
water and 1 cent for a one-
carat diamond?
When ordering Big Macs,
milkshakes, pizza, and
other goods, how can you
obtain the highest
possible satisfaction?
Do white rats obey the
law of demand?
3. 3
What is Util?
A hypothetical unit used
to measure how much
utility a person obtains
from consuming a good
4. 4
What is Utility?
The satisfaction, or
pleasure, that people
receive from consuming
a good or service
5. 5
What is Total Utility?
The amount of satisfaction
received from all the units
of a good or service
consumed
6. 6
Why does a consumer
buy one bundle of goods,
rather than another?
Consumers make one
choice over another
depending on their
marginal utility
7. 7
What is Marginal Utility?
The change in total utility
from one additional unit
of a good or service
8. 8
What is the Law of
Diminishing
Marginal Utility?
The principle that the
extra satisfaction of a
good or service declines
as people consume more
in a given period
11. 11
When is Total Utility
maximized?
When the marginal utility
per dollar of each good is
equal and the entire
budget is spent
12. 12
What is
Consumer Equilibrium?
A condition in which total
utility cannot increase by
spending more of a
given budget on one
good and spending less
on another good
13. 13
Even though water
provides a greater utility
than diamonds, why are
diamonds more expensive?
Water is plentiful in most
of the world, so its
marginal utility is low
14. 14
8
6
4
2
1 2 3 4
Marginal Utility of Diamonds
MU
Q
Marginal
Utility S
MUd
15. 15
8
6
4
2
1 2 3 4
Marginal Utility of Water
MU
Q
Marginal
Utility S
MUw
16. 16
Marginal Utility for Big Macs and
Milkshakes (utils per day) ($2 each)
Quantity MU MU/P MU MU/P
1
2
3
4
8
4
2
1
4
2
1
1/2
6
4
1
0
3
2
1/2
0
BIG MACS MILKSHAKES
18. 18
MU of Big Mac
price of Big Mac
MU of milkshake
price of milkshake
Consumer Equilibrium
Price of Big Mac = $2
4 utils
$2
4 utils
$2
=
=
19. 19
What happens if the
price of a Big Mac falls
to $1 and upsets the
previous equilibrium?
20. 20
MU of Big Mac
price of Big Mac
>MU of milkshake
price of milkshake
Consumer Equilibrium
Price of Big Mac = $1
4 utils
$1
4 utils
$2
>
21. 21
What happens to
the number of Big
Macs bought when
the price drops?
To restore maximum total
utility, the consumer
spends more on Big Macs
22. 22
What does this discussion
of Utility reveal?
The law of demand, that is,
as the price of a good
declines, consumers will
buy more units of the
good, and vice versa
23. 23
What are two alternative
explanations of demand?
Income effect
Substitution effect
24. 24
What is the
Income effect?
The change in quantity
demanded of a good or
service caused by a
change in real income
(purchasing power)
25. 25
What does the Income
effect show?
As prices decline, your real
income increases,
increasing your buying
power, so you buy more
units, ceteris paribus
26. 26
What is the
Substitution effect?
The change in quantity
demanded of a good or
service caused by the
change in its price
relative to substitutes
27. 27
What does the
Substitution effect show?
Suppose the price of a Pepsi
falls and the price of a
Coke remains unchanged;
you will buy more Pepsi,
because relatively, it is less
expensive than Coke
28. 28
What does the
Substitution and Income
effect prove?
The law of demand, that is,
as the price of a good
declines, consumers will
buy more units of the
good, and vice versa
29. 29
What is a Normal Good?
A good that consumers
will buy more of as their
incomes increase
30. 30
What is an
Inferior Good?
A good that consumers
will buy less of as their
incomes increase
32. 32
• What is Util?
• What is Utility?
• What is Total Utility?
• What is Marginal Utility?
• What is the Law of Diminishing Marginal U
• When is Total Utility maximized?
• What is Consumer Equilibrium?
Key Concepts
33. 33
Key Concepts cont.
• What are two alternative explanations of dem
• What is the Income effect?
• What is the Substitution effect?
• What does the Substitution and Income effec
• What is a Normal Good?
• What is an Inferior Good?
35. 35
Utility is the satisfaction or
pleasure derived from consumption
of a good or service. Actual
measurement of utility is
impossible, but economists assume
it can be measured by a fictitious
unit called the util.
36. 36
Total utility is the total level of
satisfaction derived from all units of
a good or service consumed.
Marginal utility is the change in
total utility from a one unit change
in the quantity of a good or service
consumed.
39. 39
The law of diminishing
marginal utility states that
marginal utility of a good or
service eventually declines as
consumption increases.
40. 40
Consumer equilibrium is the
condition of reaching the
maximum level of satisfaction,
given a budget, when the marginal
utility per dollar spent on each
good purchased is equal.
41. 41
Consumer equilibrium and the
law of diminishing marginal utility
can be used to derive a downward-
sloping demand curve. When the
price of a good falls, consumer
equilibrium no longer holds because
the marginal utility the marginal
utility per dollar for the good rises.
42. 42
To restore equilibrium, the
consumer must increase
consumption. As the quantity
demanded increases, the marginal
utility falls until equilibrium is
again achieved. Thus, the price falls
and the quantity demanded rises, as
predicted by the law of demand
44. 44
The income effect and the
substitution effect are
complementary explanations for the
law of demand. When the price
changes, these effects work in
combination to change in the
quantity demanded in the opposite
directions.
45. 45
As the price falls, real
purchasing power increases,
causing an increase in the
consumer’s willingness and ability
to purchase a good or service. This
is the income effect. Also, as the
price falls, the consumer substitutes
the cheaper the cheaper good for
other goods that are now relatively
more expensive. This is the
substitution effect.
46. 46
If the marginal utility per last
dollar spend on each good is equal
and the entire budget is spent, total
utility is maximized.
47. 47
When the price of a normal good
falls, the income effect and the
substitution effect combine to cause
the quantity demanded to increase.
49. 49
C. As a consumer consumes more and more of
anything, the satisfaction received on the last
unit becomes less and less with each unit.
1. As an individual consumes more of a given
good, the marginal utility of that good to the
consumer
a. rises at an increasing rate.
b. rises at a decreasing rate.
c. falls.
d. rises.
50. 50
D. The word “margin” means that last
unit or the last increment.
2. The amount of added utility that a
consumer gains from the consumption of one
more unit of a good is called
a. incremental utility.
b. total utility.
c. diminishing utility.
d. marginal utility.
51. 51
A. As more units of food are purchased, the
marginal utility diminishes, while that of
compact discs remains the same.
3. A certain consumer buys only food and
compact discs. If the quantity of food
bought increases, while that of compact discs
remains the same, the marginal utility of
food will
a. fall relative to the marginal utility of
compact discs.
b. rise relative to the marginal utility of
compact discs.
c. rise, but not as fast as the marginal utility
of compact discs falls.
d. fall, but not as fast as the marginal utility
of compact discs falls.
52. 52
A. If a consumer can raise his/her marginal
utility by purchasing more of a good, more
units of that good will be purchased. At the
point that marginal utility cannot be
increased by purchasing more units of either
good, the consumer will stop purchasing.
4. Rational consumers will continue to
consume two goods until
a. the marginal utility per dollar’s worth of
the two goods is the same.
b. the marginal utility is the same for each
good.
c. the prices of the two goods are equal.
d. the prices of the two goods are unequal.
53. 53
D. In terms of satisfaction, the two goods
become identical at the point of equilibrium.
5. Assume a person’s consumption of just the
right amounts of pork and chicken is in
equilibrium. We can conclude that the
a. marginal utility of pork must equal the
marginal utility of chicken.
b. price of pork must equal the price of
chicken.
c. ratio of marginal cost to price must be the
same in both the pork and the chicken
markets.
d. ratio of marginal utility to price must be
the same for pork and chicken.
54. 54
D. At this point, the ratio of utils to price
is the same.
6. Assume an individual consumes only milk and
doughnuts, and he/she has arranged
consumption so that the last glass of milk
yields 12 utils and the last doughnut 6 utils. If
the price of milk is $1 per glass and the price
of a doughnut is $.50, we can conclude that the
a. consumer should consume less milk and
more doughnuts.
b. price of milk is too high relative to
doughnuts.
c. consumer should consume more milk and
fewer doughnuts.
d. consumer is in equilibrium.
55. 55
C. When the ratio of utils to price is the same
for two goods, the consumer cannot increase
his/her satisfaction by buying more of either.
7. Suppose an individual consumes pizza and
cola. To reach consumer equilibrium, the
individual must consume pizza and cola so
that the
a. price paid for the two goods is the same.
b. marginal utility of the two goods is equal.
c. ratio of marginal utility to price is the
same for both goods.
d. ratio of marginal utility of cola to
marginal utility of pizza is 1.
56. 56
B. When the marginal utility of two goods is
the same, the consumer cannot increase
his/her level of satisfaction by purchasing
more of either good.
8. A state of consumer equilibrium for goods
consumed prevails when the
a. marginal utility of all goods is the same.
b. marginal utility per dollar’s worth of two
goods is the same.
c. price of two goods is the same.
d. marginal cost per dollar spent on two
goods is the same.
57. 57
A. When prices decline the purchasing power
of the consumer increases, and vice versa.
Therefore, a change in prices has the same
effect on the buying power of the consumer
as if his/her income had changed.
9. The change in quantity demanded resulting
from a change in purchasing power is
known as the
a. income effect.
b. substitution effect.
c. law of demand.
d. consumer equilibrium effect.
58. 58
Total Utility for Multiplex Tickets,
Video Rentals, and Popcorn
1 movie (30 utils)
2 movies (54 utils)
3 movies (72 utils)
4 movies (84 utils)
1 bag (8 utils)
2 bags (13 utils)
3 bags (15 utils)
4 bags (16 utils)
1 video (14 utils)
2 videos (24 utils)
3 videos (30 utils)
4 videos (32 utils)
Total Utility
from Multiplex
Tickets
Total Utility
from Video
Rentals
Total Utility
from Popcorn
Exhibit 4
59. 59
A. If the total utility for 2 videos is 24 utils
and the total utility for 3 videos is 30 utils,
the additional utils added by the third
video is 6.
10. In exhibit 4, assume Multiplex tickets cost
$6 each, video rentals cost $2 each, and bags
of popcorn cost $1 each. What is the
marginal utility of renting a third video?
a. 6 utils.
b. 8 utils.
c. 10 utils.
d. 30 utils.
60. 60
B. 67 total utils are achieved with this
combination, a yields 60 utils, c yields 60
utils and d yields 54 utils.
11. In exhibit 4, assume Multiplex tickets cost $6
each, video rentals cost $2 each, and bags of
popcorn cost $1 each. Suppose the consumer has
$12 per week to spend on Multiplex tickets,
video rentals, and popcorn. What combination
of goods will give the consumer the most utility?
a. 1 movie, 3 videos, and no popcorn.
b. 1 movie, 2 videos, and 2 bags of popcorn.
c. 1 movie, 1 video, and 4 bags of popcorn.
d. 2 movies, no video, and no bags of popcorn.