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N12-consumer theory-1 jpw

N12-consumer theory-1 jpw - Consumer Theory-1 Lecture 12 Dr...

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microL12-F2010-page http://www.arts.cornell.edu/econ/wissink/econ1110jpw/ Consumer Theory-1 Lecture 12 Dr. Jennifer P. Wissink ©2009 John M. Abowd and Jennifer P. Wissink, all rights reserved. October 5, 2010
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microL12-F2010-page http://www.arts.cornell.edu/econ/wissink/econ1110jpw/ Announcements: Micro F2010 PRELIM 1 is end of this week! BUY A SIMPLE NON-GRAPHING CALCULATOR BEFORE THE PRELIM! See this link for all the prelim 1 info: http://www.arts.cornell.edu/econ/wissink/econ1110jpw/e1%2 Review prelim policy on the syllabus that’s on the web page and follow instructions laid out there for any conflicts, etc. HINTS for taking exam: Read carefully, group words together and watch adjectives! Do something on every part of every problem. Work out the answer to the multiple choice question and THEN look for the choice that best fits. Bring a straight edge and a couple of different colored pens or pencils. ALL FRIDAY SECTIONS CANCELLED THIS WEEK
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microL12-F2010-page http://www.arts.cornell.edu/econ/wissink/econ1110jpw/ Consumer Theory Study of how people use their limited means to make purposeful choices. Assumes that consumers understand their choices (preferences) and the prices (opportunity costs) associated with each choice. Assumes that consumers consider the alternatives and choose to maximize their objective subject to their constraints.
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microL12-F2010-page http://www.arts.cornell.edu/econ/wissink/econ1110jpw/ Why Don’t We Just Use the Demand Curve by Itself? The “Market Demand Function & Curve” for a single good aggregates and summarizes all market consumers’ intended purchases. “Consumer Theory” allows us to build a model from scratch to: Build the market demand from its core “ingredients.” Use the consumer theory model to address issues not adequately explained via reference to the summarized and aggregated model.
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microL12-F2010-page http://www.arts.cornell.edu/econ/wissink/econ1110jpw/ Two Components of Consumer Demand Opportunities: What can the consumer afford? What are the consumption possibilities? Summarized by the budget constraint Preferences: What does the consumer like? How much does a consumer like a good? How would a consumer willingly trade off one good for another?
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