ECON 200 Lecture Notes - Lecture 18: Corn Flakes, Consumer Choice, Economic Surplus
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ECON 200 Full Course Notes
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In a grocery store, an accountant finds that profits per square foot of corn flakes (on shelves) are higher than profits per square foot of cheerios. Marginal profit from addition of an extra foot of corn flakes = marginal profit (from addition of an extra foot) of cheerios. In general, for allocating l & k allocate l & k s. t. 4 postulates of consumer choice: people have preferences, more is preferred to less, people like to sub, marginal value decreases as q increases. Measuring the price elasticity of demand among a demand curve. Elasticity = change in quantity/ quantity/ change in price/ price. N = % change in q / % change in income. If n < 0 , the good is inferior, you ll buy less of the good. If n > 0, the good is normal. Exy = % change in qx/ % change in py. For sub goods, the cross price elasticity is positive.
