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ch04 - MICROECONOMICS Theory Applications Chapter 4 Demand...

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MICROECONOMICS: Theory & Applications Hamid E Ali Chapter 4: Demand: Individual and Market
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2 Learning Objectives Understand how price changes affect consumption choices. Differentiate between the income and substitution effects associated with a price change on the consumption of a particular good. Explain the relation between income and substitution effects in the case of inferior goods. Show how individual demand curves are aggregated to obtain the market demand curve. (continued)
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3 Learning Objectives (continued) Demonstrate how consumer surplus represents the net benefit , or gain, served by an individual from consuming one market basket instead of another. Investigate the relationship between own-price elasticity of demand and the price-consumption curve. Examine network effects: the extent to which an individual consumer’s demand for a good is influenced by other individuals’ purchases. Overview the basics of demand estimation.
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4 Price Changes and Consumption Choices Price-consumption curve: a curve that identifies the optimal market basket associated with each possible price of a good, holding constant all other determinants of demand.
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