This document provides an economic analysis covering topics such as utility, marginal utility, indifference curves, demand, supply, and consumer surplus. It defines key concepts, presents illustrations and diagrams, and discusses laws such as the law of demand, law of diminishing marginal utility, and law of equi-marginal utility. It also analyzes price effect, income effect, and substitution effect using indifference curve analysis. Criticisms of various economic models are addressed.
Consumer behavior is the study of individuals, groups, or organizations and all the activities associated with the purchase, use and disposal of goods and services. Consumer behaviour consists of how the consumer's emotions, attitudes, and preferences affect buying behaviour.
The document discusses cardinal and ordinal utility analysis, the law of diminishing marginal utility, consumer surplus, and the Engel curve. It explains that cardinal utility can be measured while ordinal utility focuses on preference ranking. The law of diminishing marginal utility states that the satisfaction from additional units of a good declines as consumption increases. Consumer surplus is the difference between the most one would pay and the actual price paid, representing surplus satisfaction. The Engel curve shows how spending patterns change with different income levels.
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.
The document discusses consumer preferences and choice. It defines utility as the satisfaction derived from consumption and explains the concepts of total utility, marginal utility, and diminishing marginal utility. It contrasts cardinal and ordinal utility analysis, discussing indifference curves and how consumers seek to maximize utility subject to their budget constraint. The summary also mentions revealed preference theory, consumer equilibrium conditions, and how consumer surplus is measured as the difference between the maximum price consumers are willing to pay versus the actual price.
CONCEPT OF UTILITY & ELASTICITY OF DEMANDSaravananNR1
This document discusses concepts of utility, including definitions, types, and approaches. It covers:
- Utility is defined as the satisfaction derived from consuming a good or service and is subjective.
- There are two approaches to utility - the cardinal approach which measures utility numerically, and the ordinal approach which ranks alternatives.
- Total utility is the total satisfaction from consuming units of a good, while marginal utility is the additional satisfaction from consuming one more unit. The law of diminishing marginal utility states that marginal utility decreases with increasing consumption.
- Indifference curves illustrate combinations of goods that provide equal utility or satisfaction to a consumer. They slope downward and are convex to the origin.
This document provides an overview of indifference curve analysis for consumer equilibrium. It discusses key concepts such as indifference curves, their properties, assumptions of indifference curve analysis, indifference maps, budget lines, price and income effects, derivation of demand curves, isoquants, iso-cost curves, short-run and long-run costs. The document contains definitions and explanations of these microeconomics concepts as well as examples and diagrams to illustrate them. It is intended as a reference for understanding consumer choice theory and producer theory using indifference curve and isoquant analysis.
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.
Consumer behavior is the study of individuals, groups, or organizations and all the activities associated with the purchase, use and disposal of goods and services. Consumer behaviour consists of how the consumer's emotions, attitudes, and preferences affect buying behaviour.
The document discusses cardinal and ordinal utility analysis, the law of diminishing marginal utility, consumer surplus, and the Engel curve. It explains that cardinal utility can be measured while ordinal utility focuses on preference ranking. The law of diminishing marginal utility states that the satisfaction from additional units of a good declines as consumption increases. Consumer surplus is the difference between the most one would pay and the actual price paid, representing surplus satisfaction. The Engel curve shows how spending patterns change with different income levels.
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.
The document discusses consumer preferences and choice. It defines utility as the satisfaction derived from consumption and explains the concepts of total utility, marginal utility, and diminishing marginal utility. It contrasts cardinal and ordinal utility analysis, discussing indifference curves and how consumers seek to maximize utility subject to their budget constraint. The summary also mentions revealed preference theory, consumer equilibrium conditions, and how consumer surplus is measured as the difference between the maximum price consumers are willing to pay versus the actual price.
CONCEPT OF UTILITY & ELASTICITY OF DEMANDSaravananNR1
This document discusses concepts of utility, including definitions, types, and approaches. It covers:
- Utility is defined as the satisfaction derived from consuming a good or service and is subjective.
- There are two approaches to utility - the cardinal approach which measures utility numerically, and the ordinal approach which ranks alternatives.
- Total utility is the total satisfaction from consuming units of a good, while marginal utility is the additional satisfaction from consuming one more unit. The law of diminishing marginal utility states that marginal utility decreases with increasing consumption.
- Indifference curves illustrate combinations of goods that provide equal utility or satisfaction to a consumer. They slope downward and are convex to the origin.
This document provides an overview of indifference curve analysis for consumer equilibrium. It discusses key concepts such as indifference curves, their properties, assumptions of indifference curve analysis, indifference maps, budget lines, price and income effects, derivation of demand curves, isoquants, iso-cost curves, short-run and long-run costs. The document contains definitions and explanations of these microeconomics concepts as well as examples and diagrams to illustrate them. It is intended as a reference for understanding consumer choice theory and producer theory using indifference curve and isoquant analysis.
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 contains sample questions and answers from an economics exam for class 12 students in India. It covers topics like microeconomics vs macroeconomics, central problems of an economy, production possibility curve, law of diminishing marginal utility, consumer equilibrium, indifference curves, and the law of demand. Concepts are explained using schedules and diagrams. Overall, the document provides detailed explanations of key economic theories and concepts for senior secondary students.
Theory of Consumer Behaviour Class 12 EconomicsAnjaliKaur3
This PPT explains the consumer behaviour topic of class 12 Economics. It will be helpful for commerce students and for Teachers looking for a teaching aid.
Consumer Behaviour And Consumer Equilibrium ShrutiJain330
Consumer behavior and equilibrium can be analyzed using utility theory and indifference curves. Utility refers to the satisfaction received from consuming goods, with marginal utility declining as consumption increases per the law of diminishing marginal utility. Indifference curves graph combinations of goods that provide equal utility. The budget line shows affordable combinations given prices and income. Consumer equilibrium occurs where the marginal rate of substitution between goods equals the price ratio, and is at the highest indifference curve possible given the budget.
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.
The document discusses consumer equilibrium, which occurs when a consumer reaches the maximum level of satisfaction given their resources and prices. It provides an example using a single good to show that a consumer will purchase more of a good as long as the marginal utility of the good is greater than the price. Equilibrium is reached when the marginal utility of the good equals the price. This is shown graphically as the intersection of the marginal utility curve and the price line. The document then extends the analysis to multiple goods, stating that equilibrium occurs when the marginal utility per unit of expenditure is equal for each good.
The document introduces a group of students and their IDs. It then discusses the concept of consumer surplus, how it is displaced when price changes, and some difficulties in measuring it. Specifically, it notes that consumer surplus is the difference between what consumers are willing and able to pay versus what they actually pay. It also discusses Professor Hicks' concept of consumer surplus and four variations. Finally, it outlines some practical uses of consumer surplus in areas like public finance, monopoly pricing, cost-benefit analysis, and measuring benefits from international trade.
The document discusses various concepts related to consumer behavior theory including:
1. The law of diminishing marginal utility and how it relates to deriving a demand curve.
2. The concept of equi-marginal utility which states that a rational consumer will allocate their budget in a way that equalizes the marginal utility per unit of expenditure across different goods.
3. Indifference curves which represent combinations of goods that provide equal utility to a consumer. Key properties of indifference curves are discussed.
4. The budget constraint line which represents the maximum combination of goods a consumer can purchase given prices and their income level. Consumer equilibrium occurs at the point of tangency between the highest indifference curve and the budget line
The law of diminishing marginal utility is a law of economics stating that as a person increases consumption of a product while keeping consumption of other products constant, there is a decline in the marginal utility that person derives from consuming each additional unit of that product.
1. Marginal utility analysis assumes that utility can be measured and that utilities of different commodities are independent. It also assumes the marginal utility of money remains constant.
2. The law of diminishing marginal utility states that the marginal utility of a good decreases with each additional unit consumed.
3. The law of equi-marginal utility states that a consumer achieves maximum satisfaction when the marginal utilities of goods are equal, such that a consumer will substitute goods until their marginal utilities are equal.
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 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.
Micro Theory of Consumer Behavior and Demand.pptxJaafar47
This document provides an overview of microeconomics and consumer theory. It discusses:
1) Consumer behavior can be understood by examining preferences, budget constraints, and how preferences and constraints determine choice.
2) Utility is the satisfaction from consuming goods and is subjective. There are two approaches to measuring utility - cardinal and ordinal.
3) In cardinal utility theory, utility is measured in utils and has assumptions like diminishing marginal utility. In ordinal utility theory, utility is ranked and shown through indifference curves.
4) Consumer equilibrium occurs when marginal utility per dollar spent is equal across goods, or when marginal utility equals price for a single good. The consumer maximizes utility subject to their budget.
The document discusses various concepts related to consumer behavior theory. It begins with the law of diminishing marginal utility (concept 1) and the diamond-water paradox. It then discusses equi-marginal utility (concept 2), consumer surplus (concept 3), indifference curves and their properties (concept 4). It also discusses budget lines (concept 5) and consumer equilibrium where the budget line is tangent to the highest indifference curve (concept 6). Case studies and illustrations are provided for various concepts.
IC2
Q Good X
Substitution Effect
The document discusses concepts of utility theory including cardinal and ordinal utility, law of diminishing marginal utility, indifference curves, and consumer equilibrium. It provides explanations and diagrams to illustrate:
- The law of diminishing marginal utility and how total utility and marginal utility are related.
- Indifference curves and how they represent combinations of goods that provide the same level of satisfaction.
- How a consumer reaches equilibrium where marginal utility per dollar spent is equal across all goods, given prices and income.
- How changes in income or prices can shift the budget line or indifference curves and impact equilibrium.
This document discusses theories of consumer behavior, specifically cardinal and ordinal utility analysis. It introduces concepts like total utility, marginal utility, indifference curves, and marginal rate of substitution. Cardinal utility analysis assumes utility can be quantified numerically, while ordinal only ranks preferences. The key points covered are:
- Total utility is satisfaction from consumption, marginal utility is change in satisfaction from an extra unit. Marginal utility diminishes with more consumption due to diminishing returns.
- Demand curves slope downward because additional units provide lower marginal utility, so consumers will only buy more at lower prices.
- Indifference curves connect bundles providing equal utility/satisfaction, with downward sloping reflecting trade-offs between goods.
Demand
Law of demand
Utility
Law of Diminishing marginal utility
Movement and shift of demand curve
Elasticity of demand
Price elasticity of demand
Uses of price elasticity
Macro Economics
For downloading this contact- bikashkumar.bk100@gmail.com
Prepared by Students of University of Rajshahi
Arif Hossain
Md.Abdul Aual
Risul Islam
Abul Kalam
MD Rasel Mollah
MD Rabiul Islam
The Law of Equi-Marginal Utility states that consumers will allocate their limited income across different goods in a way that equalizes the marginal utility per rupee spent. Specifically:
1) Consumers will distribute their income so that the marginal utility derived from the last rupee spent on each good is equal.
2) They will continue reallocating spending until marginal utility per rupee is equal across all goods, reaching an equilibrium that maximizes total satisfaction.
3) This equilibrium is expressed as: Marginal Utility of Good X / Price of X = Marginal Utility of Good Y / Price of Y.
This document provides an overview of microeconomics topics related to demand and supply, including the theories of demand, law of demand, demand function, elasticity of demand and supply, consumer equilibrium using utility and indifference curve approaches, and the law of demand. It defines key concepts such as utility, total utility, marginal utility, indifference curves, budget line, and examines how factors like price, income, tastes, and expectations influence individual demand. Exceptions to the law of demand like Giffen goods are also briefly discussed.
This document discusses elasticity of demand, including its meaning, types, and methods of measurement. There are three types of elasticity: price elasticity, income elasticity, and cross elasticity. Price elasticity measures the responsiveness of demand to changes in price. Income elasticity measures the change in demand from changes in consumer income. Cross elasticity measures the change in demand of one good from price changes in related goods. Methods for measuring price elasticity include the point method, percentage method, and arc method. Factors like substitutes, income level, and proportion of expenditure influence a good's elasticity. Understanding elasticity is important for setting prices, fiscal policy, and international trade.
1. The document discusses different market structures including perfect competition, monopoly, monopolistic competition, and oligopoly.
2. Under perfect competition, there are many small firms, no barriers to entry/exit, perfect information and mobility of resources. Firms are price takers and compete by adjusting quantities.
3. Monopoly is dominated by a single seller of unique products or services with no close substitutes and barriers to entry. Monopolists are price makers that can influence the market.
3. Monopolistic competition features many firms with differentiated products. In the long run, firms earn only normal profits through adjustments to quantities.
This document contains sample questions and answers from an economics exam for class 12 students in India. It covers topics like microeconomics vs macroeconomics, central problems of an economy, production possibility curve, law of diminishing marginal utility, consumer equilibrium, indifference curves, and the law of demand. Concepts are explained using schedules and diagrams. Overall, the document provides detailed explanations of key economic theories and concepts for senior secondary students.
Theory of Consumer Behaviour Class 12 EconomicsAnjaliKaur3
This PPT explains the consumer behaviour topic of class 12 Economics. It will be helpful for commerce students and for Teachers looking for a teaching aid.
Consumer Behaviour And Consumer Equilibrium ShrutiJain330
Consumer behavior and equilibrium can be analyzed using utility theory and indifference curves. Utility refers to the satisfaction received from consuming goods, with marginal utility declining as consumption increases per the law of diminishing marginal utility. Indifference curves graph combinations of goods that provide equal utility. The budget line shows affordable combinations given prices and income. Consumer equilibrium occurs where the marginal rate of substitution between goods equals the price ratio, and is at the highest indifference curve possible given the budget.
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.
The document discusses consumer equilibrium, which occurs when a consumer reaches the maximum level of satisfaction given their resources and prices. It provides an example using a single good to show that a consumer will purchase more of a good as long as the marginal utility of the good is greater than the price. Equilibrium is reached when the marginal utility of the good equals the price. This is shown graphically as the intersection of the marginal utility curve and the price line. The document then extends the analysis to multiple goods, stating that equilibrium occurs when the marginal utility per unit of expenditure is equal for each good.
The document introduces a group of students and their IDs. It then discusses the concept of consumer surplus, how it is displaced when price changes, and some difficulties in measuring it. Specifically, it notes that consumer surplus is the difference between what consumers are willing and able to pay versus what they actually pay. It also discusses Professor Hicks' concept of consumer surplus and four variations. Finally, it outlines some practical uses of consumer surplus in areas like public finance, monopoly pricing, cost-benefit analysis, and measuring benefits from international trade.
The document discusses various concepts related to consumer behavior theory including:
1. The law of diminishing marginal utility and how it relates to deriving a demand curve.
2. The concept of equi-marginal utility which states that a rational consumer will allocate their budget in a way that equalizes the marginal utility per unit of expenditure across different goods.
3. Indifference curves which represent combinations of goods that provide equal utility to a consumer. Key properties of indifference curves are discussed.
4. The budget constraint line which represents the maximum combination of goods a consumer can purchase given prices and their income level. Consumer equilibrium occurs at the point of tangency between the highest indifference curve and the budget line
The law of diminishing marginal utility is a law of economics stating that as a person increases consumption of a product while keeping consumption of other products constant, there is a decline in the marginal utility that person derives from consuming each additional unit of that product.
1. Marginal utility analysis assumes that utility can be measured and that utilities of different commodities are independent. It also assumes the marginal utility of money remains constant.
2. The law of diminishing marginal utility states that the marginal utility of a good decreases with each additional unit consumed.
3. The law of equi-marginal utility states that a consumer achieves maximum satisfaction when the marginal utilities of goods are equal, such that a consumer will substitute goods until their marginal utilities are equal.
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 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.
Micro Theory of Consumer Behavior and Demand.pptxJaafar47
This document provides an overview of microeconomics and consumer theory. It discusses:
1) Consumer behavior can be understood by examining preferences, budget constraints, and how preferences and constraints determine choice.
2) Utility is the satisfaction from consuming goods and is subjective. There are two approaches to measuring utility - cardinal and ordinal.
3) In cardinal utility theory, utility is measured in utils and has assumptions like diminishing marginal utility. In ordinal utility theory, utility is ranked and shown through indifference curves.
4) Consumer equilibrium occurs when marginal utility per dollar spent is equal across goods, or when marginal utility equals price for a single good. The consumer maximizes utility subject to their budget.
The document discusses various concepts related to consumer behavior theory. It begins with the law of diminishing marginal utility (concept 1) and the diamond-water paradox. It then discusses equi-marginal utility (concept 2), consumer surplus (concept 3), indifference curves and their properties (concept 4). It also discusses budget lines (concept 5) and consumer equilibrium where the budget line is tangent to the highest indifference curve (concept 6). Case studies and illustrations are provided for various concepts.
IC2
Q Good X
Substitution Effect
The document discusses concepts of utility theory including cardinal and ordinal utility, law of diminishing marginal utility, indifference curves, and consumer equilibrium. It provides explanations and diagrams to illustrate:
- The law of diminishing marginal utility and how total utility and marginal utility are related.
- Indifference curves and how they represent combinations of goods that provide the same level of satisfaction.
- How a consumer reaches equilibrium where marginal utility per dollar spent is equal across all goods, given prices and income.
- How changes in income or prices can shift the budget line or indifference curves and impact equilibrium.
This document discusses theories of consumer behavior, specifically cardinal and ordinal utility analysis. It introduces concepts like total utility, marginal utility, indifference curves, and marginal rate of substitution. Cardinal utility analysis assumes utility can be quantified numerically, while ordinal only ranks preferences. The key points covered are:
- Total utility is satisfaction from consumption, marginal utility is change in satisfaction from an extra unit. Marginal utility diminishes with more consumption due to diminishing returns.
- Demand curves slope downward because additional units provide lower marginal utility, so consumers will only buy more at lower prices.
- Indifference curves connect bundles providing equal utility/satisfaction, with downward sloping reflecting trade-offs between goods.
Demand
Law of demand
Utility
Law of Diminishing marginal utility
Movement and shift of demand curve
Elasticity of demand
Price elasticity of demand
Uses of price elasticity
Macro Economics
For downloading this contact- bikashkumar.bk100@gmail.com
Prepared by Students of University of Rajshahi
Arif Hossain
Md.Abdul Aual
Risul Islam
Abul Kalam
MD Rasel Mollah
MD Rabiul Islam
The Law of Equi-Marginal Utility states that consumers will allocate their limited income across different goods in a way that equalizes the marginal utility per rupee spent. Specifically:
1) Consumers will distribute their income so that the marginal utility derived from the last rupee spent on each good is equal.
2) They will continue reallocating spending until marginal utility per rupee is equal across all goods, reaching an equilibrium that maximizes total satisfaction.
3) This equilibrium is expressed as: Marginal Utility of Good X / Price of X = Marginal Utility of Good Y / Price of Y.
This document provides an overview of microeconomics topics related to demand and supply, including the theories of demand, law of demand, demand function, elasticity of demand and supply, consumer equilibrium using utility and indifference curve approaches, and the law of demand. It defines key concepts such as utility, total utility, marginal utility, indifference curves, budget line, and examines how factors like price, income, tastes, and expectations influence individual demand. Exceptions to the law of demand like Giffen goods are also briefly discussed.
This document discusses elasticity of demand, including its meaning, types, and methods of measurement. There are three types of elasticity: price elasticity, income elasticity, and cross elasticity. Price elasticity measures the responsiveness of demand to changes in price. Income elasticity measures the change in demand from changes in consumer income. Cross elasticity measures the change in demand of one good from price changes in related goods. Methods for measuring price elasticity include the point method, percentage method, and arc method. Factors like substitutes, income level, and proportion of expenditure influence a good's elasticity. Understanding elasticity is important for setting prices, fiscal policy, and international trade.
1. The document discusses different market structures including perfect competition, monopoly, monopolistic competition, and oligopoly.
2. Under perfect competition, there are many small firms, no barriers to entry/exit, perfect information and mobility of resources. Firms are price takers and compete by adjusting quantities.
3. Monopoly is dominated by a single seller of unique products or services with no close substitutes and barriers to entry. Monopolists are price makers that can influence the market.
3. Monopolistic competition features many firms with differentiated products. In the long run, firms earn only normal profits through adjustments to quantities.
This document provides an overview of economic concepts related to production including factors of production, the law of variable proportions, returns to scale, and production functions. It discusses the key characteristics and assumptions of these concepts. Specifically:
1) It defines the four factors of production as land, labor, capital, and organization and describes their characteristics.
2) It explains the law of variable proportions and returns to scale, including the stages and assumptions of each law. Graphs and tables are provided as examples.
3) It introduces production functions and the differences between short-run and long-run functions. Isoquants and iso-cost lines are also defined and depicted in graphs.
4) Optimization of
The document provides definitions of economics from several influential economists, including Adam Smith, Alfred Marshall, Lionel Robbins, and Paul Samuelson. It also discusses key concepts in economics such as goods, wants, utility, price, value, income, and markets. The definitions show how the field of economics has evolved from focusing on wealth to considering human welfare and scarcity of resources. It examines economics as both a science and an art and explores inductive and deductive methods of analysis. Finally, it elaborates on several basic economic concepts and how economists classify goods, wants, utility, and markets.
This document provides an overview of modern banking. It begins by defining a bank and tracing the origin of modern banking to money dealers in Florence in the 14th century. It then discusses the development of banking in places like Babylon, Venice, and England. The document outlines the evolution of banking in India and describes different types of banks like commercial banks, investment banks, unit banking and branch banking. It also distinguishes between scheduled and non-scheduled banks as well as public and private sector banks. The primary and secondary functions of modern commercial banks are explained.
This document discusses research methodology, specifically focusing on methods for collecting primary and secondary data. It defines primary data as original data collected by the researcher, while secondary data is already existing data collected by others. Some key methods for collecting primary data discussed include direct personal observation, indirect oral interviews, collecting information through agencies, mailed questionnaires, and using enumerators to distribute schedules. Sources of secondary data include government publications, research institutions, commercial/financial institutions, and unpublished records. The document also covers case study methodology, defining it as an intensive examination of a single unit or case and outlining its characteristics and limitations.
This document provides an overview of research methodology basics, including the meaning of research, objectives of research, types of research, and the research process. It discusses quantitative and qualitative research methods. Quantitative research uses numerical data and statistical analysis, while qualitative research seeks to understand human behavior through in-depth exploration. Both methods have limitations, such as issues of validity, reliability, and generalizability for qualitative research, and lack of context for quantitative. The document also lists top international research institutes for economics and important research institutes in India. It provides definitions and characteristics of research and covers the key steps in the research process.
Adam Smith, David Ricardo, Thomas Malthus, and Karl Marx were influential classical economists. Adam Smith introduced concepts like the division of labor and free trade. David Ricardo developed the labor theory of value and the theory of rent. Thomas Malthus believed population growth could outpace food supply increases. Karl Marx viewed history through the lens of class struggle and believed capitalism would be overtaken by socialism and communism.
The document provides information on mercantilism and physiocracy. It discusses the key factors that led to the development of mercantilism like the changing economic base from agriculture to manufacturing, increased use of money, and expansion of commerce. It outlines the main ideas of mercantilists regarding population, wages, interest, production, and taxation. The document then introduces physiocracy as the first school of economic thought originating in France in the 18th century. It discusses the central themes of physiocracy, including the natural order, the concept of net product, and their views on the circulation of wealth in the economy.
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.
The Impact of Generative AI and 4th Industrial RevolutionPaolo Maresca
This infographic explores the transformative power of Generative AI, a key driver of the 4th Industrial Revolution. Discover how Generative AI is revolutionizing industries, accelerating innovation, and shaping the future of work.
"Does Foreign Direct Investment Negatively Affect Preservation of Culture in the Global South? Case Studies in Thailand and Cambodia."
Do elements of globalization, such as Foreign Direct Investment (FDI), negatively affect the ability of countries in the Global South to preserve their culture? This research aims to answer this question by employing a cross-sectional comparative case study analysis utilizing methods of difference. Thailand and Cambodia are compared as they are in the same region and have a similar culture. The metric of difference between Thailand and Cambodia is their ability to preserve their culture. This ability is operationalized by their respective attitudes towards FDI; Thailand imposes stringent regulations and limitations on FDI while Cambodia does not hesitate to accept most FDI and imposes fewer limitations. The evidence from this study suggests that FDI from globally influential countries with high gross domestic products (GDPs) (e.g. China, U.S.) challenges the ability of countries with lower GDPs (e.g. Cambodia) to protect their culture. Furthermore, the ability, or lack thereof, of the receiving countries to protect their culture is amplified by the existence and implementation of restrictive FDI policies imposed by their governments.
My study abroad in Bali, Indonesia, inspired this research topic as I noticed how globalization is changing the culture of its people. I learned their language and way of life which helped me understand the beauty and importance of cultural preservation. I believe we could all benefit from learning new perspectives as they could help us ideate solutions to contemporary issues and empathize with others.
Fabular Frames and the Four Ratio ProblemMajid Iqbal
Digital, interactive art showing the struggle of a society in providing for its present population while also saving planetary resources for future generations. Spread across several frames, the art is actually the rendering of real and speculative data. The stereographic projections change shape in response to prompts and provocations. Visitors interact with the model through speculative statements about how to increase savings across communities, regions, ecosystems and environments. Their fabulations combined with random noise, i.e. factors beyond control, have a dramatic effect on the societal transition. Things get better. Things get worse. The aim is to give visitors a new grasp and feel of the ongoing struggles in democracies around the world.
Stunning art in the small multiples format brings out the spatiotemporal nature of societal transitions, against backdrop issues such as energy, housing, waste, farmland and forest. In each frame we see hopeful and frightful interplays between spending and saving. Problems emerge when one of the two parts of the existential anaglyph rapidly shrinks like Arctic ice, as factors cross thresholds. Ecological wealth and intergenerational equity areFour at stake. Not enough spending could mean economic stress, social unrest and political conflict. Not enough saving and there will be climate breakdown and ‘bankruptcy’. So where does speculative design start and the gambling and betting end? Behind each fabular frame is a four ratio problem. Each ratio reflects the level of sacrifice and self-restraint a society is willing to accept, against promises of prosperity and freedom. Some values seem to stabilise a frame while others cause collapse. Get the ratios right and we can have it all. Get them wrong and things get more desperate.
Enhancing Asset Quality: Strategies for Financial Institutionsshruti1menon2
Ensuring robust asset quality is not just a mere aspect but a critical cornerstone for the stability and success of financial institutions worldwide. It serves as the bedrock upon which profitability is built and investor confidence is sustained. Therefore, in this presentation, we delve into a comprehensive exploration of strategies that can aid financial institutions in achieving and maintaining superior asset quality.
An accounting information system (AIS) refers to tools and systems designed for the collection and display of accounting information so accountants and executives can make informed decisions.
Optimizing Net Interest Margin (NIM) in the Financial Sector (With Examples).pdfshruti1menon2
NIM is calculated as the difference between interest income earned and interest expenses paid, divided by interest-earning assets.
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Optimizing Net Interest Margin (NIM) in the Financial Sector (With Examples).pdf
Economic Analysis Part-II.pptx
1. ECONOMIC ANALYSIS (PART-II)
Compiled by
Dr.S.Vigneswaran.,M.A.,Ph.D.,(NET, SET)
Assistant Professor of Economics,
Mannar Thirumalai Naicker College, Madurai-04.
2. TOPICS COVERED
Cardinal and Ordinal Utility Analysis.
Law of Diminishing Marginal Utility – Law of Equi-
Marginal Utility – Consumer’s Surplus – Law of
Demand – Why demand curve slopes downward? –
Law of supply.
Indifference Curve Analysis – Meaning – Properties –
Price Effect – Income Effect – Substitution Effect.
3. Utility: Power of a commodity to satisfy a human want.
Marginal Utility: Addition made to the total utility by
consuming one more unit of the commodity.
Total Utility: Utility derived from the consumption of all units
of the commodity taken together at a time. (Sum of the
marginal utilities.)
4. LAW DIMINISHING MARGINAL UTILITY
H.H Gossen was formulated this law in 1854.
So it is known as ‘Gossen’s First Law of
Consumption’
Marshall perfected this law on the basis of Cardinal
Analysis.
5. Assumptions:
1. Cardinal Utility.
2. Constant Marginal Utility of Money.
3. Rational Consumer.
4. Reasonable Units.
5. Homogeneity.
6. Period of Consumption.
7. No change in character of the consumer
6. THE LAW
The Law:
If a consumer continues to consume more and more
units of the same commodity, its marginal utility
diminishes.
Illustration:
No. of Guava Marginal Utility Total Utility
1 + 30 30
2 + 20 (50-30) 50
3 + 10 (60-50) 60
4 0 (60-60) 60
5 - 10 (50-60) 50
6 - 20 (30-50) 30
8. CRITICISMS OF THE LAW
1. This law assumes utility can be measured, but
utility is subjective.
2. This law is based on the unrealistic assumption.
3. Not suitable for indivisible commodities.
9. EXEMPTIONS TO THE LAW
Following are the exceptions of Law of Diminishing
Marginal Utility:
The marginal utility tends to increase in case of Hobbies,
Drunkards, Misers, Reading, Music and Poetry. So the law of
diminishing marginal utility is not applicable.
10. THE LAW OF EQUI-MARGINAL UTILITY
Also called as
The Law of Substitution
Gossen’s Second Law of Consumption
The Law of Maximum Satisfaction
The Law of Consumer’s Equilibrium
11. Assumptions:
1. Cardinal Utility.
2. Constant Marginal Utility of Money.
3. Rational Consumer.
4. Reasonable Units.
5. Homogeneity.
6. Period of Consumption.
7. Consumer’s income is fixed and limited.
8. No change in the price of the goods.
12. THE LAW
The law states that how a consumer can get
maximum satisfaction out of given expenditure on
different goods.
MUA / PA = MUB / PB = M
MU = Marginal Utility
P = Price
A = Commodity A
B = Commodity B
M = Maximum Satisfaction
13. ILLUSTRATION
Units of
Commodity
Apple Orange
MU TU MUA / PA MU TU MUB / PB
1 25 25 25 / 2 =12.5 20 20 20 / 1 = 20
2 20 45 20 / 2 = 10 11 31 11 / 1 = 11
3 18 63 18 / 2 = 9 8 39 8 / 1 = 8
4 15 78 15 / 2 = 7.5 5 44 5 / 1 = 5
5 10 88 10 / 2 = 5 4 48 4 / 1 = 4
6 4 92 4 / 2 = 2 3 51 3 / 1 = 3
GIVEN INCOME = RS.14
PRICE OF COMMODITY A = RS.2
PRICE OF COMMODITY B = RS.1
If the consumer spends Rs.10 on Apple and Rs.4 on
Orange, he gets maximum satisfaction (88 + 44 =
132 Utils)
14. DIAGRAM
MN and PQ are the Marginal Utility Curves.
If consumer consumes OA units of apple and OB units or orange, the
MU of both are equal and the satisfaction is maximum.
15. CRITICISMS OF THE LAW
1. This law assumes utility can be measured, but
utility is subjective.
2. This law is based on the unrealistic assumptions.
3. Prices of goods may change.
16. CONSUMER’S SURPLUS
Introduction:
Alfred Marshall developed this concept in 1879.
Based on Law of Diminishing Marginal Utility.
Meaning and Definition:
“Consumer’s Surplus is the difference between the potential
price and actual price” – Taussig
Consumer’s Surplus = TU – (P x Q)
Potential Price = Price that the consumer willing to pay.
Actual Price = What he actually pays.
19. ASSUMPTIONS
1. Cardinal Utility.
2. Constant Marginal Utility of Money.
3. No Substitutes.
4. Independency of utility.
5. Based on Law of Diminishing Marginal Utility.
20. CRITICISMS OF CONSUMER’S SURPLUS
1. This law assumes utility can be measured, but
utility is subjective.
2. This law is based on the unrealistic assumptions.
3. Not applicable to necessary goods.
4. In real life utilities are inter-dependent.
21. DEMAND
Meaning: Demand is a combo of ability and
willingness to buy the commodity.
Types of Demand:
1. Price Demand
Change in demand due to change in price.
2. Income Demand:
Change in demand due to change in income of the consumer.
3.Cross Demand:
Change in demand of ‘X’ due to change in price of ‘Y’
22. LAW OF DEMAND
Formulated by Augustin Cournot in 1838.
Refined by Alfred Marshall.
Explanation:
Law demand states that there is a inverse
relationship between the price and demand of a
commodity.
23. ILLUSTRATION
Price (in Rs) Quantity Demanded (in Kg)
10 10
8 20
6 30
4 40
2 50
From the above table it is evident that, when price decreased
from Rs. 10 to Rs.2; the quantity demanded is increased from
10 units to 50 units.
24. DIAGRAM
DD1 is the demand curve. The downward sloping demand curve
indicates the inverse relationship between price and demand.
26. WHY DOES DEMAND CURVE SLOPE
DOWNWARDS?
1. Law of Diminishing Marginal Utility:
The law demand is based on DMU, so the demand curve
slopes downward.
2. Income Effect:
When the price falls, the real income increases and vice
versa. So the demand change according to price.
3. Substitution Effect
If the price of substitutes remaining same, the demand for
cheaper goods increases.
27. 4. Principle of Different Uses:
Different uses of certain commodities may be restricted due to
rise in price and vice versa.
5. Price Effect:
A fall in price may attract new consumers in the market. So
demand may increase.
6. Psychological Effect:
Psychologically people buy more when price falls even the
commodity has less utility.
28. SUPPLY
Meaning of Supply:
The quantity of output that a seller is willing and able to sell at
different prices.
Law of Supply:
Denotes the ‘direct relationship between price and supply’
29. ILLUSTRATION
Price (in Rs) Quantity Supplied (in Kg)
1 10
2 20
3 30
4 40
5 50
From the above table it is evident that, when price increased
from Rs. 1 to Rs.5; the quantity supplied is increased from 10
units to 50 units.
30. DIAGRAM
SS is the supply curve. The upward sloping supply curve
indicates the direct relationship between price and
supply.
31. ASSUMPTION
1.Consumer’s income, taste, habit, preference and other things
remain constant.
Exceptions
1. Anticipation of price.
2.Need of cash.
3. Cost of production.
4. Closing of business.
5.Consumer Behaviour.
6. Agricultural Products
32. INDIFFERENCE CURVE ANALYSIS
Developed by J.R.Hicks published in his book ‘Value and
Capital’ in 1939.
Also known as ‘Ordinal Analysis’ or ‘Hicksian Approach’
Scale of Preference
Arrangement of combinations of goods in the order of level of
satisfaction.
33. ASSUMPTIONS
1. Rational Consumer.
2. Utility can be ordered by ordinal numbers such as I, II, III …
3. Based on the ‘Diminishing Marginal Rate of Substitution’
4.Consumer purchases two goods only.
5. Consumer’s income, taste, habit, preference and other things
remain constant.
37. MARGINAL RATE OF SUBSTITUTION
Willingness to surrender quantity of ‘x’ to get one
more unit of ‘Y’ for maintaining same level of
satisfaction.
Diminishing Marginal Rate of Substitution
Combinations Wheat Rice MRSWR
I 10 5 --
II 7 6 1 Unit Rice = 3 Units Wheat
III 5 7 1 Unit Rice = 2 Units Wheat
IV 4 8 1 Unit Rice = 1 Unit Wheat
38. DIAGRAM
The slope of Indifference Curve represents the Marginal Rate of
Substitution. It is always downward slopping.
39. 1. Indifference Curves Slope downward from Left to Right:
If the quantity of A increased in a combo, quantity of B reduced to
maintain same level of satisfaction.
Indifference curves can not be slope Upward, Horizontal or Vertical
like given in the diagrams A, B, C.
PROPERTIES OF INDIFFERENCE CURVES
40. 2. Indifference Curves are convex to the origin:
ICs are convex due to the principle of Diminishing Marginal Rate of
Substitution. Not like in diagrams A and B.
41. 3.Indifference curves are neither touch nor intersect each
other.
ICs represent different levels of utility, so they neither touch nor intersect
each other.
42. 4. Higher Indifference curves represent a higher level of
satisfaction:
IC that lies above to the right of the another curve represents a
greater satisfaction than that of the left.
43. 5. Indifference curves need not be parallel to each other:
MRS between the two commodities need not be the same in all
the Indifference Curves.
44. INCOME EFFECT
If the income of the consumer changes, the effect it
will have on his purchases is known as the income
Effect.
The ICC curve has a positive slope throughout its
range. Here the income effect is also positive and
both X and Y are normal goods.
45. SUBSTITUTION EFFECT
The substitution of one product for another when
there's a change in their relative pricing is known as
substitution effect.
The relation between price and quantity demanded
being inverse, the substitution effect is negative.
46. PRICE EFFECT
The price effect indicates the way the consumer’s
purchases of good X change, when its price
changes, while no change in price of Y.
The above figure showing that the consumer will
buy more X than before as X has become cheaper.