Consumer Choice And Demand

Utility Analysis ,[object Object],[object Object]

Total and Marginal Utility ,[object Object],[object Object],[object Object],[object Object]

Exhibit 1: Utility Derived from Water ,[object Object],[object Object],[object Object],Units of Water Consumed Total Marginal ( 8 ounce glass) Utility Utility 0 0 - 1 40 40 2 60 20 3 70 10 4 75 5 5 73 -2

Exhibit 2: Total and Marginal Utility Total Utility Marginal Utility ,[object Object],[object Object],[object Object],[object Object]

Utility Maximization with Scarcity ,[object Object],[object Object],[object Object],[object Object],[object Object]

Exhibit 3: Pizza & Video Rentals Marginal Marginal Utility Utility of Pizza of Videos Pizza Total Marginal per Dollar Video Total Marginal per Dollar Consumed Utility Utility Expended Rentals Utility of Utility of Expended Per Week of Pizza of Pizza (price=$8) per Week Videos Videos (price=$4) (1) (2) (3) (4) (5) (6) (7) (8) 0 0 - - 0 0 - - 1 56 56 7 1 40 40 10 2 88 32 4 2 68 28 7 3 112 24 3 3 88 20 5 4 130 18 2¼ 4 100 12 3 5 142 12 1½ 5 108 8 2 6 150 8 1 6 114 6 1½ ,[object Object],[object Object],[object Object]

Utility-Maximizing Condition ,[object Object],[object Object]

Law of Demand and Marginal Utility ,[object Object],[object Object],[object Object]

Marginal Marginal Utility Utility Pizza Total Marginal per Dollar Video Total Marginal per Dollar Consumed Utility Utility Expended Rentals Utility of Utility of Expended Per Week of Pizza of Pizza (price=$8) per Week Videos Videos (price=$4) (1) (2) (3) (4) (5) (6) (7) (8) 0 0 - - 0 0 - - 1 56 56 9 1/3 1 40 40 10 2 88 32 5 1/3 2 68 28 7 3 112 24 4 3 88 20 5 4 130 18 3 4 100 12 3 5 142 12 2 5 108 8 2 6 150 8 1 1/3 6 114 6 1½ Exhibit 4: Pizza & Video Rentals ,[object Object],[object Object]

Exhibit 5: Demand for Pizza Generated from Marginal Utility P r i c e p e r p i z z a $8 6 4 2 0 Pizzas per week D a 1 2 3 4 ,[object Object],[object Object],b

Exhibit 6: Consumer Surplus ,[object Object],[object Object],[object Object],$8 7 6 5 4 3 2 1 0 1 2 3 4 5 6 7 8 D Price per Subway Subways per month

Exhibit 7: Summing Individual Demands to Derive Market Demand $6 4 2 0 2 6 12 ( d) Market demand for Subways d Y + d B + d C = D $6 4 2 0 d C (c) Chris 2 $6 4 2 0 d B (b) Brittany 2 4 $6 4 2 0 Subways per month d Y (a) You P r i c e 2 4 6 ,[object Object],[object Object],[object Object]

Exhibit 8: Market Demand and Consumer Surplus $2 0 Quantity per period D ,[object Object],[object Object],[object Object],[object Object],[object Object],Price per unit 1

Consumer Surplus ,[object Object],[object Object],[object Object],[object Object],[object Object]

Role of Time in Demand ,[object Object],[object Object],[object Object],[object Object]

Role of Time in Demand ,[object Object],[object Object],[object Object]

Consumer Choice And Demand

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Consumer Choice And Demand