No Slide Title
... quantity demanded of a commodity with
variations in its own price while
everything else is considered constant.
APPLIED ECONOMICS FOR MANAGERS: SESSION 4
... ELASTICIY OF SUPPLY: ηS =
ΔP / P Q SLOPE
D. DEMAND SHOCKS MOVE EQUILIBRIUM PRICE AND
QUANTITY IN THE SAME DIRECTION
E. SUPPLY SHOCKS MOVE EQUILIBRIUM PRICE AND
Marginalist Hall of Fame
... First Principles:
• Decision at margin
• Prices determined by
interaction of supply (costs)
and demand (utilities)
• Distribution accords with
Executive MPA Foundation Week II Economics I-IV
... – Shape of the indifference curves describe whether goods are goods or bads
– We usually assume diminishing marginal utility implies convex indifference
• Perfect substitutes and perfect complements are special cases
- Muckross Transition Year
... The Law of
Diminishing Marginal Utility
• states that as a consumer consumes
extra units of a good, then at some stage
the marginal utility will decrease.
Consumer & utility
... If the price of one good
falls while the other remain
constant, more of the
relatively cheap good will
be bought until the MU/P is
the same for all goods
Monopoly 2 and Monopsony
... analysis we have to figure out what the marginal benefit and marginal expenditure to the
Marginal Benefit (MB)—Demand Curve
Marginal Expenditure (ME)—Marginal Cost with double the slope
Equilibrium Quantity is given by MB = ME
Price is given by marginal cost at the equilibrium quantity.
Scarcity and Choice
... the alternative use of the resources) is known
as the opportunity cost of making that choice.
It is the cost of the next best thing that you
could have done with the same resources.
• Opportunity costs include the actual monetary
cost of a choice, but they also include time
and forgone opportunities ...
Marginalism is a theory of economics that attempts to explain the discrepancy in the value of goods and services by reference to their secondary, or marginal, utility. The reason why the price of diamonds is higher than that of water, for example, owes to the greater additional satisfaction of the diamonds over the water. Thus, while the water has greater total utility, the diamond has greater marginal utility. The theory has been used in order to explain the difference in wages among essential and non-essential services, such as why the wages of an air-conditioner repairman exceed those of a childcare worker.The theory arose in the mid-to-late nineteenth century in response to the normative practice of classical economics and growing socialist debates about social and economic activity. Marginalism was an attempt to raise the discipline of economics to the level of objectivity and universalism so that it would not be beholden to normative critiques. The theory has since come under attack for its inability to account for new empirical data.Although the central concept of marginalism is that of marginal utility, marginalists, following the lead of Alfred Marshall, drew upon the idea of marginal physical productivity in explanation of cost. The neoclassical tradition that emerged from British marginalism abandoned the concept of utility and gave marginal rates of substitution a more fundamental role in analysis. Marginalism is an integral part of mainstream economic theory.