Ch12___Consumer_Theory__Handouts_

Ch12___Consumer_Theory__Handouts_ - Consumer Choice and...

Info iconThis preview shows pages 1–15. Sign up to view the full content.

View Full Document Right Arrow Icon
Consumer Choice and emand CHAPTER 12 Demand
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
C H A P T E R C H E C K L I S T When you have completed your study of this chapter, you will be able to 1 Calculate and graph a budget line that shows the limits to a person’s consumption possibilities. 2 Explain the marginal utility theory and use it to derive a consumer’s demand curve.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
C H A P T E R C H E C K L I S T When you have completed your study of this chapter, you will be able to 1 Calculate and graph a budget line that shows the limits to a person’s consumption possibilities. 2 Explain the marginal utility theory and use it to derive a consumer’s demand curve.
Background image of page 4
12.1 CONSUMPTION POSSIBILITIES ± The Budget Line A budget line describes the limits to consumption choices and depends on a consumer’s budget and the prices of goods and services. et’s look at Tina’s budget line: Let s look at Tina s budget line: Tina has $4 a day to spend on two goods: bottled water nd gum and gum. The price of water is $1 a bottle. he price of gum is 50 a pack The price of gum is 50¢ a pack.
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
12.1 CONSUMPTION POSSIBILITIES Pw = Price of Water Pg = Price of Gum Qw = Quantity of Water g Qg = Quantity of Gum Pw Qw Water ($) Pg Qg Gum($) Income $1 $0.5 $4 1 0 5 4 $1 $0.5 $4 $1 $0.5 $4 $1 $0.5 $4 $1 $0.5 $4
Background image of page 6
12.1 CONSUMPTION POSSIBILITIES Pw = Price of Water Pg = Price of Gum Qw = Quantity of Water g Qg = Quantity of Gum Pw Qw Water ($) Pg Qg Gum($) Income $1 0 $0.5 $4 1 0 5 4 $1 1 $0.5 $4 $1 2 $0.5 $4 $1 3 $0.5 $4 $1 4 $0.5 $4 Fill in the blanks
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
12.1 CONSUMPTION POSSIBILITIES Pw = Price of Water Pg = Price of Gum Qw = Quantity of Water g Qg = Quantity of Gum Pw Qw Water ($) Pg Qg Gum($) Income $1 0 $0.5 $4 1 0 5 4 $1 1 $0.5 $4 $1 2 $0.5 $4 $1 3 $0.5 $4 $1 4 $0.5 $4
Background image of page 8
12.1 CONSUMPTION POSSIBILITIES Tina’s consumption possibilities. Points A through E n the graph on the graph represent the rows of the table. The line passing through the points is Tina’s budget line.
Background image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
12.1 CONSUMPTION POSSIBILITIES The budget line eparates separates combinations that are affordable from combinations that are unaffordable.
Background image of page 10
Background image of page 11

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
12.1 CONSUMPTION POSSIBILITIES ± A Change in the Budget When a consumer’s budget increases, consumption possibilities ______. When a consumer’s budget decreases, consumption possibilities _____.
Background image of page 12
12.1 CONSUMPTION POSSIBILITIES Pw Qw Water ($) Pg Qg Gum($) Income Q ($) g ($) $1 0 $0 $0.5 8 $4 $4 $1 1 $1 $0.5 6 $3 $4 1 2 0 5 2 4 $1 2 $2 $0.5 4 $2 $4 $1 3 $3 $0.5 2 $1 $4 $1 4 $4 $0.5 0 $0 $4 Pw Qw Water ($) Pg Qg Gum($) Income $1 0 $0.5 $2 $1 1 $0.5 $2 $1 2 $0.5 $2 $ 13 $0.5 $2 $1 4 $0.5 $2
Background image of page 13

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
12.1 CONSUMPTION POSSIBILITIES Pw Qw Water ($) Pg Qg Gum($)
Background image of page 14
Image of page 15
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 57

Ch12___Consumer_Theory__Handouts_ - Consumer Choice and...

This preview shows document pages 1 - 15. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online