tailieunhanh - Lecture Business economics - Lecture 5: The theory of consumer choice - I

After completing this chapter, students will be able to: See how a budget constraint represents the choices a consumer can afford, learn how indifference curves can be used to represent a consumer’s preferences, analyze how a consumer’s optimal choices are determined,. | Review of the previous lecture Price elasticity of demand measures how much the quantity demanded responds to changes in the price. Price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. If a demand curve is elastic, total revenue falls when the price rises. If it is inelastic, total revenue rises as the price rises. The income elasticity of demand measures how much the quantity demanded responds to changes in consumers’ income. The cross-price elasticity of demand measures how much the quantity demanded of one good responds to the price of another good. The price elasticity of supply measures how much the quantity supplied responds to changes in the price. . Review of the previous lecture In most markets, supply is more elastic in the long run than in the short run. The price elasticity of supply is calculated as the percentage change in quantity supplied divided by the percentage change in price. The tools of | Review of the previous lecture Price elasticity of demand measures how much the quantity demanded responds to changes in the price. Price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. If a demand curve is elastic, total revenue falls when the price rises. If it is inelastic, total revenue rises as the price rises. The income elasticity of demand measures how much the quantity demanded responds to changes in consumers’ income. The cross-price elasticity of demand measures how much the quantity demanded of one good responds to the price of another good. The price elasticity of supply measures how much the quantity supplied responds to changes in the price. . Review of the previous lecture In most markets, supply is more elastic in the long run than in the short run. The price elasticity of supply is calculated as the percentage change in quantity supplied divided by the percentage change in price. The tools of supply and demand can be applied in many different types of markets. Price Restrictions Price Ceilings The maximum legal price that can be charged. Examples: Gasoline prices in the 1970s. Housing in New York City. Proposed restrictions on ATM fees. Price Floors The minimum legal price that can be charged. Examples: Minimum wage. Agricultural price supports. Impact of a Price Ceiling Price P Ceiling Quantity S D P* Q s PF Shortage Q d Impact of a Price Floor PF Price Quantity S D P* Surplus Lecture 5 The theory of consumer choice - I Instructor: Abbas Course code: ECO 400 Lecture Outline Budget constraint Indifference curve Properties of indifference curve Introduction The theory of consumer choice addresses the following questions: Do all demand curves slope downward? How do wages affect labor supply? How do interest rates affect household saving? The Budget Constraint: What The Consumer Can Afford The budget constraint depicts the limit on the consumption “bundles” .

• Kinh tế học
• Business economics
• Lecture Business economics
• Business applications of economics
• Open economy
• Competitive markets
• Consumer choice
• Economic Models
• Principles of economics
• Economics of agriculture
• Monopolistic competition
• Macroeconomic policy
• Supply curve
• Elasticity of demand
• Competitive firms
• Imperfect competition
• Gross domestic product
• Financial intermediaries
• Productivity growth
• Natural rate of unemployment
• Labor force
• Money supply