ECON101 Lecture Notes - Lecture 14: Demand Curve, Neuroeconomics, Budget Constraint
6 Nov 2018
School
Department
Course
Professor
ECON101 verified notes
14/25View all
Document Summary
Pick a bundle from the affordable set that either maximises the combined total utility or where the marginal utility per dollar spent are equal. The law of demand: when price goes up, quantity demanded goes down. Mum divided by pm = mup divided by pp (this doesn"t hold true anymore as price of movie has changed) Now, mum divided by pm > mup divided by pp. This process continues until the consumer reaches the new equilibrium of 6 movies, 4 pop. s. Mu diamond divided by p diamond (high) = mu water / p water (low) Tu of water is high tu of diamond is low. Mu of water is low mu of diamond is high. Price of water is low price of diamond is high. Alternative valuation methods: labour theory of value, biophysical measures of value mfa, ef, hanpp, energy theory of value (laws of thermodynamics) Neoclassical economic = rational consumer: behavioural economics, neuroeconomics - involves the brain, ecological economics.
