Micro economic UTILITY AND DEMAND参考.ppt

* * * * * * * * * Notes and teaching tips: 5, 17, 32, 37, and 41. To view a full-screen figure during a class, click the red “expand” button. To return to the previous slide, click the red “shrink” button. To advance to the next slide, click anywhere on the full screen figure. * * The budget line is like a restaurant menu. This example has been well received: Emphasize that the consumer’s budget line is like a menu showing what affordable combinations of food and drink are available to the consumer. Ask them to compare the relative prices between two goods: food and drink and depict the affordable combinations a diner can purchase with a set income. * * * * * * * * * * * * Decisions, decisions: Chardonnay or cheesecake? What combination of food and drink will the diner select? It depends upon the willingness to give up some food for additional drink. Is the diner willing to forgo the appetizer in order to enjoy a second glass of wine with dinner? Or will the diner have only ice water in order to afford a dessert after the main course? Have them construct a preference map reflecting the diner’s indifference between exchanging a quantity of drink for a quantity of food. (Be sure that the indifference curves for both scenarios reflect diminishing marginal rate of substitution.) * * * * * * * * * * * * Marginal decision making is the core of the economic way of thinking. Get your students to appreciate that, aside from the concept of opportunity cost, marginal reasoning is the most important tool for understanding the economic perspective. Remind them that we have been using marginal reasoning for many chapters now: In Chapter 2 we derived the marginal cost of production from the PPF. In Chapter 5 we discovered that competitive equilibrium is efficient because marginal benefit on the demand curve equals marginal cost on the supply curve. In this chapter, we discover that equalizing the marginal utility per dollar across all goods and services maximizes a consume