This document contains a very detailed topic-by-topic, page-by-page summary of CIE A-level Microeconomics, NOTE: Only A-level summary not AS level. This includes factors, definitions, and evaluation points of each topic in A-level Microeconomics. Contains all of UNIT 7 and UNIT 8.
Ps, if there a...
How LDMU links to the demand : the demand for
curve : This
Individual demand
service
is
by one .
consumer
a
good or s
Chain of
reasoning :
·
How MI is the demand curve :
Market demand This : is the demand from all consumers
Consumers rational merket for
good
·
are in a a or service .
> ·
If MU measured in terms of
was
money
When the MU curve becomes a demand .
curve
6 Which Price
(P2) (Pu) When
with and whythey
would
weia
g MU MU has been
replaced > :
drops Ad
hig.
her
-
·
is
price
·
with then the units consumed
Similarly if priac
↳ the MU
price a ,
more
from Pr to Pr.
↳ In which costs benefits MU
=
price paid =
Psy
1
, ,
(P1) (3) When price Ad would decrease
↳ Where when making
>
-
: increases
purthechasing
.
is
decision
why
the consumer
a
MU/demand
t
Similarly when fewer units consumed at
are LBMU
↳
compares
-
↓
~
-
.
purchased
·
Assumptions of the theory :
·
Exceptions of the law :
Total/Marginal
-
-
ju
·
Consumers are
rational : lase of intoxicants
·
:
↳
Essential y that will to
- -
assumes consumers
try
make the best value of their better
.
money youred .
· Limitations of LDMU :
·
Continuous purchases :
·
Collectibles :
will Unit of measurement
purchase and people
Mis
6 Assumes that consumers
↳ E Rare items that .
collect ·
:
g.
.
single period of time cannot be measured it
the
good Satisfaction/utility numerically
consume in a .
↳
·
·
MoneyAs subjective and varies between people and time .
·
Constant MK of
money : someone
gets richer
they may value ·
, Analysis of the link
Background info This principle explains
·
· :
:
Link showed
through graph and examples ↳ Because of the
-
a :
Price
assumption of consumer
Equi-marginal utility The
from the lastmaximiz
· : consumer
2
assumed to re-allocate
of
As result of un
right rationality they
↑
good A
now
= 10 a a are
,
equi-marginal utility the MI
rato
their
gai n ed unit
piincreasethe a
= 10 as incorre
per
so on
money spent
each
good equal Consumer equilibrium A equili
4 ·
on is : consumer is in
if T 4
product A to B to
price ↳
=
relation ship
iqui-marginal utility So when pieofgood
2 inverse ins,
good A
good this shows relationship Consumer disequilibrium
consumerisindise
A
of
A ,
inverse
an ,
· :
similar to the inverse relationships that
the demand has This is the
curre
Process showed
.
↓
through numbers : link
.
· Table (L) Lem
:
A disequilibrium when
An
consumer is in :
↳ Quantity
if the
A -
↑ 1
! In this 3
by
-
overall satisfaction
case the consumer is
getting higher
a
Y
consuming goodof whichwoulthedsuggestthathmaybe
too e
and
consumi nga -
~
to consume
the
more
good of
a so NU decreases
balance and
less
good
y
so
My increases
causing a
equilibrium .
-
A conc
(2) and (5
Assumptions of
equi-marginal utility
·
:
·
However ,
·
Factors held constant : 3 lemon
↳
Income/budget change
of
,
in tastes and wants,
all held constant
limitations of the
equ-marginal utility theory : here the
prices goods are .
·
Unit of measurement :
Consumer information ↳ Uses cordinal-numerical
approach to calculate how much satisfaction ·
Concluding statements · How
·
: a a :
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller krish966. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for £8.23. You're not tied to anything after your purchase.