Output and Price Decisions
The Firm’s Profit-Maximizing Decision Facing a downward-sloping demand curve, a firm in monopolistic competition chooses its profit-maximizing price and quantity as does a monopoly. The…
Principles Of Marketing
8Ps of Integrated Service Management
Product. Managers must select the features of both the core product and the bundle of supplementary service elements surrounding it, with reference to the benefits…
Psychological Factors Affecting Buying Behaviors
A person’s buying choices are further influenced by four major psychological factors: motivation, perception, learning, and beliefs and attitudes. Motivation We know that Lucy became…
Policy implications
Suppose that government wished to encourage individuals to work for longer hours. How might this be done? One method operates by shifting upwards the schedule…
Utility and consumer preferences
Utility refers to the satisfaction or enjoyment which comes from the consumption of goods over some interval of time. For simplicity, suppose that only two…
An indifference curve shows all combinations of the two goods which yield a particular level of utility.
The shape of an indifference curve will depend upon the utility function of the individual concerned. One likely shape for an indifference curve is shown…
The individual’s budget constraint
As individuals are utility maximisers, each person seeks to be on an indifference curve as far away from the origin as possible. The extent to…
Utility maximisation subject to a budget constraint
For a consumer with a limited income (and that is all of us once our work-leisure choices have been made), the best or efficient allocation…
The efficient allocation of a consumers budget
We have just seen how a utility maximising consumer allocates a budget between two goods. It is possible to generate a simple rule from this…
DERIVATION OF THE SLOPES OF AN INDIFFERENCE CURVE AND A BUDGET CONSTRAINT
Consider one indifference curve. Let the individual consume a small additional amount of x. The effect of this on total utility is given by the…