Chapter 4 Individual and Market demand
Chapter 4 Individual and Market Demand
Topics to be Discussed ■| ndividual demand a Income and substitution effects ■ Market demand a Consumer Surplus Chapter 4 Slide 2
Chapter 4 Slide 2 Topics to be Discussed ◼ Individual Demand ◼ Income and Substitution Effects ◼ Market Demand ◼ Consumer Surplus
Topics to be Discussed ■ Network externalities Empirical Estimation of Demand Chapter 4 Slide 3
Chapter 4 Slide 3 Topics to be Discussed ◼ Network Externalities ◼ Empirical Estimation of Demand
Individual demand ■ Price Changes o Using the figures developed in the previous chapter, the impact of a change in the price of food can be illustrated using indifference curves Chapter 4 Slide 4
Chapter 4 Slide 4 Individual Demand ◼ Price Changes ⚫ Using the figures developed in the previous chapter, the impact of a change in the price of food can be illustrated using indifference curves
Effect of a Price Change Clothing (units per month) Assume. =$20 10 Pc=$2 PF=$2,$1,$50 5 D Three separate indifference curves are tangent to each budget line Food (unit 4 per month) hapter 4 Slide 5
Chapter 4 Slide 5 Effect of a Price Change Food (units per month) Clothing (units per month) 4 5 6 U2 U3 A B D U1 4 12 20 Three separate indifference curves are tangent to each budget line. Assume: •I = $20 •PC = $2 •PF = $2, $1, $.50 10