ECO3041 - Ch 4 Notes

ECO3041 - Ch 4 Notes - FIU Department of Economics Chapter...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
FIU Department of Economics Chapter 4 Notes Consumer Demand from Essentials of Economics 7 th edition
Background image of page 1

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

View Full DocumentRight Arrow Icon
Chapter 4 Notes I. Determinants of Demand The Socio-psychiatric Explanation From a socio-psychological perspective, we consume G & S in order to fulfill our id, ego and superego. Just in case: The id is “part of the personality structure that contains the basic drives.” (Rycroft 1968 - from Wikipedia) Ego “seeks to please the id’s drive in realistic ways that will benefit in the long term rather than bringing grief.” (Noam 1984- from Wikipedia) Superego “comprises that organized part of the personality structure, commonly called ‘conscience’.” (Wikipedia 2010) The book explains that we yearn to stand above the clouds. As I see it, we consume to fit in our society. Economic explanation Desire and preference plays and important part in our consumption decision, however price and income play a part as well. Demand is the ability and willingness to buy specific quantities of goods at alternative prices in a given time period, ceteris paribus. The market demand is determined by (see chapter three for more details): Taste Income Expectation Other goods and The number of consumers in the market III. The Demand curve Utility Theory In general the theory explains that the more satisfaction we obtain from a product, the more we are willing to pay for it. 2 | P a g e
Background image of page 2
Chapter 4 Notes Total vs. marginal Utility is the pleasure of satisfaction obtained form a good. Total utility is the amount of satisfaction obtained from entire consumption of products. Marginal utility is the satisfaction obtained by consuming one additional unit of a good Diminishing marginal utility Law of diminishing marginal utility states that the marginal utility of a good declines as more of it is consumed in a given period of time.
Background image of page 3

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

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 6

ECO3041 - Ch 4 Notes - FIU Department of Economics Chapter...

This preview shows document pages 1 - 4. Sign up to view the full document.

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