ECON 201 Lecture Notes - Lecture 11: Consumer Choice
11 Oct 2018
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Econ 201 lecture 11 (chapter 6) consumer choice and demand decisions (wednesday 10/10 week 6) Keyterms: rational choice/rationality: every individual has specific goals/objectives they wish to achieve, and they act in a way that is orientated towards attaining their goals. (philanthropy and equity are not consitent. Economists analyze individual decision using 2 approaches: utility analysis and indifference analysis. *** we assume that mu is shrinking => each additional unit consumed brings less and less additional utility (satisfaction) than the one consumed right before it. Example: when you are thirsty, the first cup of water would be a great pleasure and more worthy than the sixth cup of the same water. Opposing case: cocain => increasing marginal utility (the first try will not bring as much pleasure as the latter one, because you already got addicted to it) Therefore drug dealers will give free sample => addicted => pay more for the next use.
