Microeconomics

Chapter 20: Elasticities of beg and Supply Chapter 21: Consumer Behavior and Utility Maximization Demand ? willingness and ability to pay for totals and services An individuals demand for a unique(predicate) product is determined by these four factors: ?Tastes (desire for this and other goods) ?Income (of the consumer) ?Expectations (for income, prices, tastes) ? other(a) goods (their availability and prices) The more pleasure a product gives us, the high the price wed be willing to pay for it Utility  anticipate pleasure or satisfaction Total service ? measuring rod of satisfaction obtained from your entire consumption of a product Marginal utility ? amount of satisfaction you get from consuming the last (marginal) whole of a product. Marginal Utility = Change in add utility Change in quality MU is +  TU  Law of Diminishing Utility = from each one successive unit of a good consumed yields less supernumerary utility (satisfaction) Thrill diminishes with each mouthful With given income, tastes, expectations, and prices of other goods & services, masses are willing to buy additional quantities of a good only if its price crepuscules. As MU diminishes  so does our willingness to pay LAW OF petition (page 374, Figure 21.

1) Price breeze ? (by how much the quantity demanded would fall if the price were raised) ?The response of consumers to a pitch in price ?%change in quantity demanded / % change in price Price Elasticity=% change in Qd E% change in P 1. idiom: The percentages changes are compared, not the absolute changes. a.Absolute changes depend on choice of units. For example, a change in the price of a $10,000 car by $1 and is very different than a change in the price a of $1 stub of beer by $1. The autos price is upgrade by a fraction of a percent while the beer price is rising 100 percent. b. Percentages also make it possible to compare elasticities of demand... If you lack to get a full essay, order it on our website: Ordercustompaper.com

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