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9.21.10 Econ

9.21.10 Econ - Law of Diminishing Marginal Utility-the...

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9/21/10 Economics Notes Demand is more elastic in the long run because the consumer is able to find more substitutes Demand is more inelastic in short run because you’ll have to settle with whatever’s given. Perfectly inelastic demand curve is a vertical line. Elasticity = 1. Any increase in interchange is a net change of 0 Parallel elastic demand curve would be drawn parallel to the x-axis Determinants of elasticity - merchant segments have unique characteristics - different merchants have different profiles for elasticities
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Unformatted text preview: Law of Diminishing Marginal Utility-the value that a consumer places on additional units of a particular good or service will diminish as total consumption of it increases – the consumption of all other goods and services remaining constant Utility – happiness. What people get out of consuming some particular good or service. The unit is called utils Marginal – Extra or incremental MUx/Px = MUy/Py = MUz/Pz...
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