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Lecture

Assumptions, Law of Demand, and Goods

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Department
Economics
Course
ECON 1050
Professor
Bryce Mc Bride
Semester
Fall

Description
Lecture September 19September 19 2013259 PMAssumptions 1People want happiness utilityHappiness comes from consuming goods and servicesThe more one consumes the happier The less one consumes the less happierEach additional unitsportions of a good increase our happiness by less than the previous unit I get less more happyDiminishing Marginal UtilityRepresent the Assumptions 2Create graph and test assumptionsIndifference curve is shaped by the Diminishing Marginal UtilityIndifference curves show a persons preferencesWhat a person buys depends on hisher budgetLaw of DemandThere is an inverse relationship between the price of a good and the quantity demanded I can show the Law of Demand using a demand curve Lower the price more the demandHigher the price less the demandIf the price changes I need only move along the demand curve If other things weather tastes income ect cause the demand quantity to change I need to shift the demand curveQuanti
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