Principles of Economics Session 3
Principles of Economics Session 3
Topics To Be Discussed Consumer Preferences ◆ Budget constraints ◆ Consumer choice ◆ Marginal utilit Substitution and income effect
Topics To Be Discussed Consumer Preferences Budget Constraints Consumer Choice Marginal Utility Substitution and Income Effect
Topics to be Discussed ◆ Market demand ◆ Consumer Surplus ◆ Recognizing lock-n
Topics to be Discussed Market Demand Consumer Surplus Recognizing Lock-In
Steps of Studying Consumer Behavior Study consumer preferences o How and why do people prefer one good to another? Study budget constraint How are consumers constrained by their limited incomes? Combine consumer preferences and budget constraints to determine consumer choices o What combination of goods will consumers buy to maximize their satisfaction?
Steps of Studying Consumer Behavior Study consumer preferences How and why do people prefer one good to another? Study budget constraint How are consumers constrained by their limited incomes? Combine consumer preferences and budget constraints to determine consumer choices What combination of goods will consumers buy to maximize their satisfaction?
Market Basket Amarket basket is a collection of one or more commodities Y One market basket may be preferred over another market basket containing a different combination of goods
Market Basket A market basket is a collection of one or more commodities. One market basket may be preferred over another market basket containing a different combination of goods