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Economics Dependent on the Consumer (2 pages)

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Economics Dependent on the Consumer

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A lecture on how economics works looking at consumers. The lecture goes over budget constraints and indifference sets.


Lecture number:
6
Pages:
2
Type:
Lecture Note
School:
The University of Oklahoma
Course:
Econ 1123 - Princ. of Econ-Micro
Edition:
1

Unformatted text preview:

ECON 1123 1st Edition Lecture 6 Outline From Previous Lecture (Lecture 5) I. Changes in Demand or Supply: The General Cases II. Total revenue (TR) and Total expenditure (TE) III. The concept of elasticity A. Price Elasticity of Demand (Ed) 1.Three Possibilities 2. Relationship between Ed 3. Determinants of Ed Outline Lecture 6 I. Consumer Choice: The Essence of the Problem II. Subjective Consumer Preferences: Indifference Sets III. Objective Consumer Circumstances: The Budget Constraint Lecture 6 Notes I. Consumer Choice: The Essence of the Problem In a general sense, a person will have unlimited material desires versus limited economic resources. Individually there will be subjective desires (how much do I value this good?) versus objective circumstances (how much can I afford to pay for the good?) Note: how do we measure subjective desires? First we must assume that individuals can rank in order their preferences II. Subjective Consumer Preferences: Indifference Sets Corollary- consumers recognize some combinations of goods as equally satisfying. The consumer is said to be “indifferent” among such combinations. Example: You could have these combinations: Combo A: 16 Apples, 3 nuts Combo B: 12 Apples, 4 nuts Combo C: 10 Apples, 5 nuts These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.



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