ECON 101 Lecture Notes - Lecture 3: Economic Surplus, Toothpaste, Demand Curve

37 views4 pages

azurewasp442

11 Jan 2017

School

Department

Course

Professor

For unlimited access to Class Notes, a Class+ subscription is required.

sangriahare462 and 5 others unlocked

ECON 101 Full Course Notes

Verified Note

30 documents

Document Summary

Consumption decision depends upon: price, marginal value how much we"re willing to give up for each additional unit. *will continue to consume as long as mv (for each additional unit) > price. *stop consuming good at point where mv = price. (willing to give up for an additional unit) Q (units consumed: tv = (mv) Ex: if price was on above demand curve consumer will consume 3 units tv = a + b: total expenditure (te) = price * quantity. Area of b: consumer surplus (cs) = area of a. Market demand curve horizontal sum of the ind demand curves at each price. Market demand: interps of market demand curve ~ indv demand curves. Height of demand curve at given q = mv of the good at that quantity. Area under demand curve up to q consumed = tv for all consumers in market.

Related Questions

1) Collegetown is planning a parade for their conference champion football team. The residents must decide how much to spend on parade floats. The marginal cost of each float is $410. There are two types of football fans in Collegetown, regular and diehard. The marginal benefit of each additional parade float is represented in the following table:

Q	MBR	MBDH
1	25	55
2	20	50
3	15	45
4	10	40
5	5	35

If Collegetown has 5 regular fans and 9 diehard fans, what is the socially optimal number of parade floats?

2)Using the midpoint formula, find the elasticity coefficient for a producer when a price increase from $3.50 to $4.50 causes a fall in quantity demanded from 52 units to 40 units.

3)A monopolist sells 15 holiday greeting cards for $4.50 apiece. If the monopolist desires to sell a 16th card, then the price must be lowered to $4.40. The marginal revenue earned from selling the additional card is $____.

5)A firm in a perfectly competitive labor market has a marginal revenue product of labor curve of MRP = 84 â 3L. If the market wage rate is $9, the profit-maximizing level of employment is ____ workers.

6)If the price of good X rises, then the resulting decrease in the consumerâs quantity demanded will___ the consumer's total utility from consuming X and____ the consumer's marginal utility from that last unit of X consumed.

budget line

marginal utility

complete property of preferences

market demand

consumption bundle

substitution effect

Giffen good

total effect

income effect

transitive property of preferences

indifference curves

utility

the marginal rate of substitution

utility function

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

1. If marginal utility is negative, total utility is

a. Positive

b. Negative

c. Decreasing

d. Constant

e. Increasing

2. If utility-maximizing consumers face identical prices, they will have identical

a. Marginal utilities for each good

b. Ratio of marginal utilities for each good

c. Preferences

d. Ratios of total utilities for each good

e. Total utilities for each good

3. The substitution effect

a. Always increases quantity demanded of a good whose relative price has fallen

b. Is opposite in sign to the income effect for all normal goods

c. Is opposite in sign to the income effect for all normal goods

d. May cause demand curves to be upward sloping

e. Is always dominated by the income effect for normal goods

4. Demand curves for normal goods slope downward because

a. The substitution effect of a price change is greater than the income effect

b. Substitution and income effects work in the same direction

c. The income effect is always greater than the substitution effect

d. The income effect is always less than the substitution effect

e. None of the above

5. The idea that a consumer derives less additional satisfaction from consuming successive units of a good is called

a. Diminishing consumer surplus

b. The paradox of value

c. Diminishing marginal utility

d. Diminishing total value of consumption

e. Diminishing total utility

indigolocust149

ECON 101 Lecture Notes - Lecture 3: Economic Surplus, Toothpaste, Demand Curve

ECON 101 Full Course Notes

Document Summary

Get access

Related Documents

ECON 101 Study Guide - Midterm Guide: Deadweight Loss, Midpoint Method, Demand Curve

ECON 101- Final Exam Guide - Comprehensive Notes for the exam ( 115 pages long!)

ECON 101 Lecture Notes - Lecture 1: Demand Curve, Economic Surplus, Opportunity Cost

Related Questions