ECON 1011 Chapter 6: Chapter 6: Household Behavior and Consumer Choice

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Constrained choice: the decisions we make under constraints that exist in the marketplace. Every household must make three basic decisions: how much of each product, or output, to demand, how much labor to supply, how much to spend today and how much to save for the future. The determinants of household demand: several factors influence the quantity of a given good or service demanded. The prices of other products available to the household. The household"s expectations about future income, wealth, and prices: changes in demand shift the demand curve. The budget constraint: budget constraint: the limits imposed on household choices by income, wealth, and product prices. Primarily results from external limits (for instance in competitive markets they cannot control prices: choice set/opportunity set: the set of options that is defined and limited by a budget constraint, preferences, tastes, trades-offs, and opportunity cost. Households are free to choose what they will and will not buy.

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n this assignment you will apply consumer choice theory and marginal analysis to business problems. Consider each of the following products and services: a pair of tickets to a sporting or cultural event that you enjoy a can of common table salt a college class In a two-page essay: Explain how your own current household budget, tastes and preferences, and future expectations determine how much of each of these products you purchase in a year. Describe the benefits (utility) you get from each product and service. Suppose the price of the tickets were cut in half. How would your consumption of cultural or sporting goods change? Why? Suppose your household budget was suddenly doubled because you received a 100% raise. How would your consumption of each of these goods and services change? Explain your answer in terms of utility and marginal analysis. What is the law of diminishing marginal utility? How does this law affect the ability of table salt companies to stimulate demand for their product?

In this assignment, you will apply consumer choice theory and marginal analysis to business problems.

Consider each of the following products and services:

a pair of tickets to a sporting or cultural event that you enjoy

a can of common table salt

a college class

In a two-page essay:

Explain how your own current household budget, tastes and preferences, and future expectations determine how much of each of these products you purchase in a year. Describe the benefits (utility) you get from each product and service.

Suppose the price of the tickets was cut in half. How would your consumption of cultural or sporting goods change? Why?

Suppose your household budget was suddenly doubled because you received a 100% raise. How would your consumption of each of these goods and services change? Explain your answer in terms of utility and marginal analysis.

What is the law of diminishing marginal utility? How does this law affect the ability of table salt companies to stimulate demand for their product?

orchidminnow140

In this assignment, you will apply consumer choice theory and marginal analysis to business problems.

Consider each of the following products and services:

a pair of tickets to a sporting or cultural event that you enjoy

a can of common table salt

a college class

In a two-page essay:

Suppose the price of the tickets was cut in half. How would your consumption of cultural or sporting goods change? Why?

What is the law of diminishing marginal utility? How does this law affect the ability of table salt companies to stimulate demand for their product?

maroonarmadillo57

ECON 1011 Chapter 6: Chapter 6: Household Behavior and Consumer Choice

ECON 1011 Full Course Notes

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