MGEA02H3 Lecture Notes - Lecture 5: Budget Constraint, Diminishing Returns, Economic Surplus

• School: UTSC
• Department: Economics for Management Studies
• Course: MGEA02H3
• Professor: Jack Parkinson

Document Summary

Mgea02h3 lecture 5 theory of consumer demand. Lecture 5 will cover chapter 5 and appendix 5a of the microeconomics textbook. The branch of economics devoted to the study of consumer behavior, especially as it applies to decisions related to purchasing goods and services through markets. Consumer demand theory is largely centered on the study and analysis of the utility generated from the satisfaction of wants and needs. The key principle of consumer demand theory is the law of diminishing marginal utility, which offers an explanation for the law of demand and the negative slope of the demand curve. Consumer demand theory provides insight into an understanding market demand and forms a cornerstone of modern microeconomics. In particular, this theory analyzes consumer behavior, especially market purchases, based on the satisfaction of wants and needs (that is, utility) generated from the consumption of a good.