Samenvatting
Summary Micro Economics: Background to Demand (CH4)
Chapter 4: Background to Demand 4.1-4.4
[Meer zien]Voorbeeld 2 van de 12 pagina's
Voorbeeld 2 van de 12 pagina's
In winkelwagengesponsord bericht van onze partner
Gekoppeld boek
Titel boek:
Auteur(s):
- Uitgave:
- ISBN:
- Druk:
Voorbeeld van de inhoud
Micro Economics: Chapter 4:Background to Demand
Rational action involves considering the relative costs and benefits to us of the alternatives
we could spend our money on.
Rational consumer A person who weighs up the costs and benefits to him or her of each
additional unit of a good purchased.
‘irrationally’ buy goods impetuously or out of habit.
4.1 Marginal utility theory
Total and marginal utility
Utility is satisfaction you get from buying goods and services.
Total utility The total satisfaction a consumer gets from the consumption of all the units of a
good consumed within a given time period.
Marginal utility The extra satisfaction gained from consuming one extra unit of a good
within a given time period.
Util An imaginary unit of satisfaction from the consumption of a good.
Diminishing marginal utility
The marginal utility falls, the more you consume. This is known as the principle of
diminishing marginal utility.
Diminishing marginal utility As more units of a good are consumed, additional units will
provide less additional satisfaction than previous units.
At some level of consumption, your total utility will be at a maximum. No extra satisfaction
can be gained by the consumption of further units within that period of time.
Total and marginal utility curves
If we could measure utility, we could construct a table showing how much total and marginal
utility a person would gain at different levels of consumption of a particular commodity. This
information could then be transferred to a graph.
The MU curve slopes downwards.
The TU curve starts at the origin. The TU curve reaches a peak when marginal utility is zero.
Marginal utility can be derived from the TU curve.
, The ceteris paribus assumption
Each time the consumption of other goods changed – whether substitutes or complements –
a new utility schedule would have to be drawn up. The curves would shift. Remember, utility
is not a property of the goods themselves. Utility is in the mind of the consumer, and
consumers change their minds. Their tastes change; their circumstances change; their
consumption patterns change.
The optimum level of consumption: the simplest case – one
commodity
One solution to the problem is to measure utility with money. In this case, utility becomes
the value that people place on their consumption. Marginal utility thus becomes
the amount of money a person would be prepared to pay to obtain one more unit: in other
words, what that extra unit is worth to that person.
Consumer surplus The excess of what a person would have been prepared to pay for a good
(i.e. the utility) over what that person actually pays.
Marginal consumer surplus
Marginal consumer surplus The excess of utility from the consumption of one more unit of a
good (MU) over the price paid: MCS = MU – P.
Total consumer surplus
Total consumer surplus The excess of a person’s total utility from the consumption of a good
(TU ) over the total amount that person spends on it (TE): TCS = TU − TE.
All the marginal consumer surpluses that you have obtained from all the units of a good you
have consumed.
Rational consumer behaviour The attempt to maximise total consumer surplus.
If the price of a commodity is P1, the consumer will consume Q1. The person’s total
expenditure (TE) is P1Q1, shown by area 1. Total utility (TU ) is the area under the marginal
utility curve: i.e. areas 1 + 2. Total consumer surplus (TU − TE) is shown by area 2.
Marginal utility and the demand curve for a good
An individual’s demand curve
Individual people’s demand curve for any good will be the same as their marginal utility
curve for that good, where utility is measured in money.
The market demand curve
The market demand curve will simply be the (horizontal) sum of all individuals’ demand
curves and hence MU curves.
Voordelen van het kopen van samenvattingen bij Stuvia op een rij:
Verzekerd van kwaliteit door reviews
Stuvia-klanten hebben meer dan 700.000 samenvattingen beoordeeld. Zo weet je zeker dat je de beste documenten koopt!
Snel en makkelijk kopen
Je betaalt supersnel en eenmalig met iDeal, creditcard of Stuvia-tegoed voor de samenvatting. Zonder lidmaatschap.
Focus op de essentie
Samenvattingen worden geschreven voor en door anderen. Daarom zijn de samenvattingen altijd betrouwbaar en actueel. Zo kom je snel tot de kern!
Veelgestelde vragen
Wat krijg ik als ik dit document koop?
Je krijgt een PDF, die direct beschikbaar is na je aankoop. Het gekochte document is altijd, overal en oneindig toegankelijk via je profiel.
Tevredenheidsgarantie: hoe werkt dat?
Onze tevredenheidsgarantie zorgt ervoor dat je altijd een studiedocument vindt dat goed bij je past. Je vult een formulier in en onze klantenservice regelt de rest.
Van wie koop ik deze samenvatting?
Stuvia is een marktplaats, je koop dit document dus niet van ons, maar van verkoper femkeaa. Stuvia faciliteert de betaling aan de verkoper.
Zit ik meteen vast aan een abonnement?
Nee, je koopt alleen deze samenvatting voor €3,49. Je zit daarna nergens aan vast.
Is Stuvia te vertrouwen?
4,6 sterren op Google & Trustpilot (+1000 reviews)
Afgelopen 30 dagen zijn er 53068 samenvattingen verkocht
Opgericht in 2010, al 14 jaar dé plek om samenvattingen te kopen