CAS EC 101 Study Guide - Midterm Guide: Market Power, Demand Curve, Economic Surplus

• School: Boston University
• Department: Economics
• Course: CAS EC 101
• Professor: Michael Manove

Document Summary

How do consumers decide what to purchase? primarily a question of psychology. But economists traditionally have used models of rational, self interested consumers. The traditional models do not include the psychological factors that guide consumers but traditional models have been useful for predicting consumers but traditional models have been useful for predicting consumer demand economics and psychology. Nowadays, many economists work in the field of behavioral economics, which incorporates. According to the classical model, people consume in order to get satisfaction or utility. Different quantities of various goods and services provide difficult amounts of utility. Rational people want to purchase a combination of goods and services that will maximize their. Economists also use the neoclassical models which is more abstract and may be misleading. She will try to get the most utility from dollar after dollar utility within the constraints (limits) imposed by their income and wealth utility, then she must think at the margin .