ECON 1B03 Lecture 44: Consumer Theory: Consumer Preferences

Which of the following looks at the demand side of the market to explain some of the observed international trade patterns?

Vending machines that sell candy and drinks are engineered so that only one item is dispensed at a time. Vending machines that sell newspapers are engineered so that the consumer has access to a pile of papers although they have paid for only one paper. Can you use consumer demand theory to explain this difference (hint consider the structure of preferences for different goods)?

d. The Theory of Consumer Behavior: i. Explain the key dimensions of the Theory of Consumer Behavior and what the theory tells us. ii. Explain how well the theory of consumer behavior reflects reality.