PPT-Consumer Choice: Maximizing Utility and Behavioural Economics

Ch 18 RA Arnold Economics 9 th Ed Diamond Water Paradox This is the name of another interesting observation by Adam Smith He observed that sometimes the things which are most useful to us eg water have a relativelycomparatively low price and things which have little use eg diamond have a relatively high price. . Regulation. Alberto Alemanno. HEC Paris. NYU . School. of Law. our. . understanding. of . regulation. . is. set to . change. as a . result. of . b. ehavioural. sciences. involve. . the . systematic. . (Health) . Economics. An Introduction by Graham Lister. Paul Samuelson 1932-2009 Nobel prize winner in economics, textbook on rational market and utility. He believed in . regulated. markets. He said In economics “Always go back for the second lesson”. This is it!. 6. Consumer Behavior and . Utility Maximization. 4 Key Concepts. Understanding Utility: Total and Marginal. Utility Maximization: Equalizing Marginal Utility per Dollar (MU/P. A. = MU/P. B. ). Individual and Market Demand Curves. M.N. SIKWILA. (PhD Economics). CONTACT: 0736024908. LESSON: OUTCOMES. After this lesson you should be able to:. Explain economic concepts models used in your industry and the economy . Discuss micro and macroeconomic issues that affect the working of the economy. Spoilt for Choice. William Stanley Jevons:. assumed measurable utility. outlined the law of diminishing marginal utility, which states that a consumer’s marginal utility declines as more of a product is consumed. University of Texas at Austin. Chandra R. . Bhat. Introduction: . Choice Modeling. A set of tools to predict the choice behavior of a group of decision-makers in a specific choice context.. Picture Reference: Future and Simple-Choice Modeling (by Steve Cook and Michael McGee). Summary . 2017 Economics 101 CCC. THINKING LIKE AND ECONOMIST . Chapter 1, 2, 3, 5,. market systems: elements of how a market works. questions of economics how & for whom?. social versus self interest. Edition. PART II. THE MARKET SYSTEM. Choices Made by Households and Firms. Copyright. PART II THE MARKET SYSTEM . (1 of 2. ). Assumptions for Chapters 6 through 12:. perfect . knowledge . The assumption that households . Some amount of income inequality is to be expected in a market economy.. Wage discrimination accounts for a small amount (3–5%) of wage differences.. Women still earn less than men, although the gap has narrowed.. 2. Agenda. Consumer Utility. Consumer Choice. Revealed Preference. 3. Consumer Theory. There are two important pillars that consumer theory rests upon:. The utility function. The budget constraint. 4. . and. . experimental. health . economics. Arthur E. Attema (Erasmus University Rotterdam). attema@eshpm.eur.nl. OHEJP Summer School, 26. th. August, 2019. Decision theory. 'Decision' . is the simplest element to be . Introduction. Supply and Demand Models (Ch. 2) are useful for analyzing economic questions concerning markets.. How will increasing the real wage affect output?. In these models we summed each individuals demand to obtain the market demand curve.. 3.5. ●. . marginal utility (MU) . Additional satisfaction obtained from consuming one additional unit of a good.. ●. . diminishing marginal utility . Principle that as more of a good is consumed, the consumption of additional amounts will yield smaller additions to utility.. Arsens. Jules . Dupuit. . in 1844. Later . Alfred Marshall . developed this concept in his famous work . ‘Principles of Economics'. . . In our daily life, we consume many commodities that are available cheap. Example: salt, match box news papers, etc. The utility from these commodities is so high that we would be prepared to pay higher prices for them than we actually pay. .