微观经济学英文课件chapter_3Consumer Behavior.ppt

Chapter 1 Chapter 3 Consumer Behavior Topics to be Discussed Consumer Preferences Budget Constraints Consumer Choice Revealed Preferences Topics to be Discussed Marginal Utility and Consumer Choices Cost-of-Living Indexes Consumer Behavior Two applications that illustrate the importance of the economic theory of consumer behavior are: Apple-Cinnamon Cheerios The Food Stamp Program. Consumer Behavior General Mills had to determine how high a price to charge for Apple-Cinnamon Cheerios before it went to the market. Consumer Behavior When the food stamp program was established in the early 1960s, the designers had to determine to what extent the food stamps would provide people with more food and not just simply subsidize the food they would have bought anyway. Consumer Behavior These two problems require an understanding of the economic theory of consumer behavior. Consumer Behavior There are three steps involved in the study of consumer behavior. 1) We will study consumer preferences. To describe how and why people prefer one good to another. Consumer Behavior There are three steps involved in the study of consumer behavior. 2) Then we will turn to budget constraints. People have limited incomes. Consumer Behavior There are three steps involved in the study of consumer behavior. 3) Finally, we will combine consumer preferences and budget constraints to determine consumer choices. What combination of goods will consumers buy to maximize their satisfaction? Consumer Preferences A market basket is a collection of one or more commodities. One market basket may be preferred over another market basket containing a different combination of goods. Consumer Preferences Three Basic Assumptions 1) Preferences are complete. 2) Preferences are transitive. 3) Consumers always prefer more of any good to less. Consumer Preferences A 20 30 B 10 50 D 40 20 E 30 40 G 10 20 H 10 40 Consumer Preferences Indifference curves represent all combinations of market b