ECON 201 Lecture Notes - Lecture 7: Normal Good, Dishwasher, Perfect Information
Document Summary
Chapter 7: consumer choice and elasticity: understand demand, the five fundamentals of consumer choice & behavior (menu at a restaurant, limited income- necessitates choice: Consider opportunity costs: substitute one good for another: Maximize satisfaction: decision made lacking perfect information. Obtain information (costs time and money) should = value derive consequences never fully anticipated: law of diminishing marginal utility applies: Your willingness to pay diminishes with increased consumption. Mu may initially rise at first, however eventually it will decrease as consumers willingness to pay decease: total utility, conclusion (law of dim. marginal utility. As q consumed increases, the mu gained from consuming additional units of a good will begin to decline. Your willingness to pay diminishes with increased consumption (pizza, etc: d curves are sloping downward (cid:1006) (cid:862)la(cid:449)s(cid:863) Law of demand (inverse relationship p & q) Law of diminishing mu: as q consumed increases, mu decreases diminishes (willingness to pay decreases: mu (cid:449)ith (cid:858)(cid:373)ore tha(cid:374) o(cid:374)e good(cid:859)
