Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Demand & Utility TOPIC: Demand & Utility DO NOW: Go to the board and write how much you would be willing to pay for each item. DEMAND The ability and How willingness paywe’re the do we knowtowhat current market price for WILLING a good/service. to pay for something? Define: 1) Ability, 3) market price, 2) willingness, 4) good/service. UTILITY The satisfaction derived from consuming a good/service. (It is ambiguously measured) Desert story. Marginal Utility: Satiation Point: the extra utility gained from The point on a utility function consuming one additionalUtility Graph where utility is maximized. unit of a good or service. Utility 50 40 Disutility 30 20 10 0 -10 0 -20 1 2 3 4 # of Glasses of H2O 5 6 7 Back to the Do Now… Would you still buy it if… The perfect jeans cost $1000? Your dream house was in war torn Iraq or communist North Korea? You knew your healthcare coverage would be revoked if you got cancer or any other long term illness. What’s the point? When (perceived) utility changes, demand for the good/service changes. Committee Work: You live in NYC and have just started a new company. What is the name of your company? What good/service are you making? Why will people want to buy your good/service? List at least 5 factors (internal & external) that may change the perceived utility of the product/service you offer. How do you think the change in utility will impact the demand for your good/service? Present and debate this with each other.