ECON102 Chapter Notes - Chapter 8-9: Demand Curve, Indifference Curve, Divisor

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greenelephant991

21 Mar 2016

School

University of Waterloo

Department

Economics

Course

ECON102

Professor

Wokia Kumase

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ECON102 Full Course Notes

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Your consumpion possibiliies are all the things that you can aford to buy. A budget line marks the boundary between those combinaions of goods and services that a household can aford to buy and those that it cannot aford. A rise in income shits the budget line outward but leaves its slope unchanged. A change in a price changes the slope of the line. Uility is the beneit or saisfacion that a person gets from the consumpion of goods and services. Total uility is the total beneit that a person gets from the consumpion of all the diferent goods and services and it depends on the level of consumpion. Marginal uility is the change in total uility that results from a one-unit increase in the quanity of good consumed. Marginal uility is posiive, but diminishes as the quanity of a good consumed increases.

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consumption bundle

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1.	_____	The satisfaction or benefit that consumers receive from consuming goods or services.
2.	________________ _	A particular combination of specific quantities of goods or services
3.	________________ _	Consumers can rank all conceivable bundles of goods or services
4.	_____	If A is preferred to B, and B is preferred to C, then A is always preferred to C.
5.	_____	Equation showing a consumerâs perception of the total utility forthcoming from consuming each bundle of goods and services.
6.	_____	A set of consumption bundles each and every one of which provides a consumer with exactly the same level of total utility.
7.	_____	The number of units of Y that must be given up for total utility to remain the same when one more unit of X is consumed.
8.	_____	The addition to total utility attributable to consuming one more unit of a good, holding the consumption of all other goods constant.
9.	_____	The line showing all bundles of goods that can be purchased at given prices if the entire income is spent.
10.	_____	The change in the consumption of a good that would result if the consumer remained on the original indifference curve after the price of the good changes.
11.	_____	The change in consumption of goods results strictly from the change in purchasing power after the price of a good changes.
12.	________________ _	The sum of the substitution and income effects.
13.	_____	A good for which quantity demanded varies directly with price, causing an upward sloping demand curve.
14.	_____	A list of prices and the corresponding quantity consumers are willing and able to purchase at each price.

blushwildebeest943

11. The budget line shows the boundary between those combinations of goods and services that A) have positive marginal utility and those that have negative marginal utility. B) are available and those that are unavailable. C) are desirable and those that are undesirable. D) are affordable and those that are unaffordable. E) are normal goods and those that are inferior goods.

In this assignment, you will apply consumer choice theory and marginal analysis to business problems.

Consider each of the following products and services:

a pair of tickets to a sporting or cultural event that you enjoy

a can of common table salt

a college class

In a two-page essay:

Explain how your own current household budget, tastes and preferences, and future expectations determine how much of each of these products you purchase in a year. Describe the benefits (utility) you get from each product and service.

Suppose the price of the tickets was cut in half. How would your consumption of cultural or sporting goods change? Why?

Suppose your household budget was suddenly doubled because you received a 100% raise. How would your consumption of each of these goods and services change? Explain your answer in terms of utility and marginal analysis.

What is the law of diminishing marginal utility? How does this law affect the ability of table salt companies to stimulate demand for their product?

orchidminnow140

ECON102 Chapter Notes - Chapter 8-9: Demand Curve, Indifference Curve, Divisor

ECON102 Full Course Notes

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