tailieunhanh - Lecture Principles of microeconomics - Chapter 5: Demand: The benefit side of the market

This chapter introduces you to the concept of utility, and the way in which economists use utility to explain consumer choice. You will also learn about demand elasticity, and how consumer choice affects total expenditure on goods and services. | Competition and the Invisible Hand Part 2 What is Part 2 About? 5 - The Benefit Side (Ch. 5): Preview 5 - The Cost Side (Ch. 6): Preview 5 - Efficiency and Exchange (Ch. 7): Preview 5 - The Invisible Hand (Ch. 8): Preview 5 - Demand: The Benefit Side of the Market What is Chapter 5 about? 5 - I. Needs, Wants and Demand 5 - Prices and Quantity Demanded In markets, the price rations goods and services among competing users The demand curve is a relationship between the quantity demanded and its price Holding all else constant – . quality 5 - Law of Demand People do less of what they want to do as the cost of doing it rises Why ? Cost-Benefit Principle Pursue an action if and only if its benefits are at least as great as its costs Reservation Price sets the limit The highest price we’d be willing to pay 5 - Fig. The Effect of Crop Failure on Consumption 800 500 4 5 Q (1000s of kg/day) P ($/kilo) S′ S D 5 - Utility Utility - the . | Competition and the Invisible Hand Part 2 What is Part 2 About? 5 - The Benefit Side (Ch. 5): Preview 5 - The Cost Side (Ch. 6): Preview 5 - Efficiency and Exchange (Ch. 7): Preview 5 - The Invisible Hand (Ch. 8): Preview 5 - Demand: The Benefit Side of the Market What is Chapter 5 about? 5 - I. Needs, Wants and Demand 5 - Prices and Quantity Demanded In markets, the price rations goods and services among competing users The demand curve is a relationship between the quantity demanded and its price Holding all else constant – . quality 5 - Law of Demand People do less of what they want to do as the cost of doing it rises Why ? Cost-Benefit Principle Pursue an action if and only if its benefits are at least as great as its costs Reservation Price sets the limit The highest price we’d be willing to pay 5 - Fig. The Effect of Crop Failure on Consumption 800 500 4 5 Q (1000s of kg/day) P ($/kilo) S′ S D 5 - Utility Utility - the satisfaction people derive from consumption activities Utility Maximization – we assume people try to allocate their incomes to maximize their satisfaction Assumption: the more we consume, the more utility we have (up to a point) Economics is only part of life – but it is an important part 5 - Fig. Total Utility from Ice Cream Consumption 5 - Table Total and Marginal Utility from Ice Cream Consumption 5 - Marginal Utility The additional utility gained from consuming an additional unit of a good Diminishing Marginal Utility As consumption of a good increases, the additional utility gained from an extra unit of the good tends to decline ., the “next” unit of the good does not give as much utility as the previous one 5 - Optimal Consumption The affordable combination of goods consumed that yields the highest total utility for the individual consumer 5 - Rational Spending Rule Allocate spending across goods so that the marginal utility per dollar is the same for each

• Kinh tế học
• Principles of microeconomics
• Lecture Principles of microeconomics
• Market imperfections
• Labour markets
• Law of demand
• Total utility
• Ten principles of economics
• Scarce resources
• Scarcity implies choice
• Choice implies cost
• Thinking like an economist
• Economic models
• Circular flow diagram
• Production possibilities frontier
• The gains from trade
• Production possibilities
• Comparative advantage
• Absolute advantage
• Market forces
• Supply and demand
• Market economies
• Competitive markets
• Price elasticity of demand
• Price elasticity
• Midpoint method
• Demand curves
• Controls on prices
• Price ceiling
• Price floor
• Market outcomes
• Market failures
• Negative externalities
• Positive externalities
• Market inefficiency
• Public goods
• Common resources
• Types of goods
• Cost benefit analysis
• Tax system
• Federal government
• Marginal tax rate
• Budget surplus
• Costs of production
• Total revenue
• Total cost
• Opportunity costs
• Firms in competitive markets
• Average revenue
• Marginal revenue
• Sunk costs
• Monopoly resources
• Government created monopolies
• Natural monopolies
• Monopoly’s revenue
• Monopolistic competition
• Nash equilibrium
• Equilibrium for oligopoly
• Game theory
• Long run equilibrium
• Perfect competition
• Production possibility frontier
• Opportunity cost
• Rational people
• Indirect effects
• Factors change demand
• Law of supply
• Market demand
• Demand intersect
• Demand determine prices
• Change in demand
• Change in supply
• Elastic demand curve
• Policy analysis with supply
• Policy analysis with demand
• Wealth creation
• Production cost
• Total surplus
• International trade
• Additional benefits of trade
• Average costs
• Break even price
• Increasing marginal costs
• Long run analysis
• Firms profit graphically
• Accounting profit
• Market effectiveness
• Monopolist pricing
• Price discrimination
• Antitrust laws
• Disruptive innovation in oligopolies
• Predatory pricing