ECON 1001_2010_Week 4_lecture_4

ECON 1001_2010_Week 4_lecture_4 - Lecture 4: Consumer and...

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

View Full Document Right Arrow Icon
ECON 1001 Lecture 4 1 Lecture 4: Consumer and Firm Behaviour
Background image of page 1

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

View Full DocumentRight Arrow Icon
ECON 1001 Lecture 4 2 Food for Growth III Life’s battles don’t always go to the stronger or faster person. But soon or late the person who wins is the person who thinks he/she can! ( Anonymous ) Whether you think you can or think you can’t, you are right ( Henry Ford )
Background image of page 2
ECON 1001 Lecture 4 3 Consumer and Firm Behaviour Lecture 4 .1 Demand (consumer) - utility, marginal utility - marginal benefit (and diminishing marginal benefit) - consumer surplus Lecture 4 .2 Supply (producer) - costs, revenue, profit - marginal cost - producer surplus
Background image of page 3

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

View Full DocumentRight Arrow Icon
ECON 1001 Lecture 4 4 Utility A numerical indicator of a person’s A numerical indicator of a person’s preferences in which higher levels of utility preferences in which higher levels of utility indicate a greater preference indicate a greater preference
Background image of page 4
ECON 1001 Lecture 4 5 Utility A basis for comparison “I prefer ice cream to chocolate” “Ice cream gives me greater utility than chocolate” Units are arbitrary
Background image of page 5

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

View Full DocumentRight Arrow Icon
ECON 1001 Lecture 4 6 Examples of Utility Functions One good (x) U(x) = x U(x) = x 0.5 U(x) = ln(x) Two goods (x, y) U(x,y) = xy U(x,y) = (xy) 0.5 U(x,y) = x + y
Background image of page 6
ECON 1001 Lecture 4 7 Marginal Utility The additional utility gained from The additional utility gained from the consumption of an additional the consumption of an additional unit of a good unit of a good MU MU X = = TU / TU / Q Q X
Background image of page 7

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

View Full DocumentRight Arrow Icon
ECON 1001 Lecture 4 8 Marginal Utility The rate of change or slope of utility MU(x) = dU/dx Example: U(x) = x 0.5 MU(x) = 0.5x -0.5 = 0.5/x 0.5
Background image of page 8
ECON 1001 Lecture 4 9 Cups of Cups of Coffee Coffee Utility from Utility from Coffee Coffee Marginal Marginal Utility Utility 0 0 1 1 2 2 3 3 4 4 5 5 Utility Example: Coffee 0 0 11 11 20 20 26 26 30 30 32 32 - - 11 11 9 9 6 6 4 4 2 2
Background image of page 9

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

View Full DocumentRight Arrow Icon
ECON 1001 Lecture 4 10 Bottles of Bottles of Water Water Utility from Utility from Bottled Water Bottled Water Marginal Marginal Utility Utility 0 0 1 1 2 2 3 3 4 4 5 5 Utility Example: Water 0 0 20 20 36 36 44 44 48 48 50 50 - - 20 20 16 16 8 8 4 4 2 2
Background image of page 10
ECON 1001 Lecture 4 11 Utility 0 5 10 15 20 25 30 35 0 1 2 3 4 5 Cups of Coffee per Day Utility Utility Utility Cups Cups 0 0 1 1 2 2 3 3 4 4 5 5 0 0 11 11 20 20 26 26 30 30 32 32
Background image of page 11

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

View Full DocumentRight Arrow Icon
ECON 1001 Lecture 4 12 Marginal Utility 0 2 4 6 8 10 12 0 1 2 3 4 5 Cups of Coffee per Day Marginal Utility Marginal Marginal Utility Utility Cups Cups 0 0 1 1 2 2 3 3 4 4 5 5 - - 11 11 9 9 6 6 4 4 2 2
Background image of page 12
ECON 1001 Lecture 4 13 Diminishing Marginal Utility Diminishing Marginal Utility The decline in additional utility from The decline in additional utility from consumption of an additional unit of a consumption of an additional unit of a good as more and more of the good is good as more and more of the good is consumed consumed
Background image of page 13

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

View Full DocumentRight Arrow Icon
ECON 1001 Lecture 4 14 Marginal Benefit Marginal Benefit The increase in the benefit from, The increase in the benefit from, or the willingness to pay for, one or the willingness to pay for, one more unit of a good more unit of a good
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.

This note was uploaded on 06/10/2011 for the course ECON 1001 taught by Professor - during the Three '07 term at University of Sydney.

Page1 / 51

ECON 1001_2010_Week 4_lecture_4 - Lecture 4: Consumer 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