Economics 314 Coursebook‚ 2010 Jeffrey Parker 16 THEORIES OF CONSUMPTION AND SAVING Chapter 16 Contents A. Topics and Tools............................................................................. 1 B. The Kuznets Paradox ....................................................................... 3 C. Relative-Income Hypothesis .............................................................. 5 D. Life-Cycle Model and Permanent-Income Hypothesis .............................. 7
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Market Structure o Perfect (pure) competition Price–taking firms each with no influence over the ruling market price (see diagram below) Free entry and exist of businesses in the long run – drives down profits towards a normal profit equilibrium level Each supplier produces homogeneous products – each a perfect substitute – hence the perfectly elastic demand curve for the individual supplier Key factor - interdependent nature of pricing decisions between rival firms Each firm must consider
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Status Consumption According to Mason (1981)‚ significant levels of status consumption exist in all communities in the world. This consumption behaviour contributes significantly in shaping consumer preferences for many products. Eastman‚ Goldsmith‚ and Flynn (1999) define status consumption as “the motivational process by which individuals strive to improve their social standing through the conspicuous consumption of consumer products that confer and symbolize status both for the individual and
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CONSUMPTION DIARY : THE DIFFERENCE BETWEEN MY NEEDS AND WANTS IN A WEEK In today’s society‚ it is noticeable that the economics is acknowledging and describing the difference between needs and wants. What people need to realize is that‚ do we want them or do we really need them? People nowadays buy things everyday and often tend to get their wants more than needs compare to people in the 1800s‚ who survived without wanting or desire towards something. Those days it is common to have the needs
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11/30: (Bring pencil and calculator) Exam Review: GDP: * Y = C + I + G + ( X - M ) Pent-Up Demand “If you want to slow an economy to a screeching halt‚ make tax policy uncertain.” Fiscal Cliff: * Jan 1‚ 2013 * Bush era tax cuts expire‚ increasing tax rate for ALL income groups * Automatic spending cuts (Official) Start of the last recession: * December 2007 (Official) End of last recession: * June 2009 Chapter 16: * Not on final‚ but know the difference
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THE CONSUMPTION FUNCTION To make the income-expenditure model more realistic‚ we will need to introduce other components of demand‚ including the government and the foreign sector. But first we need to recognize that consumers planned expenditures will depend on their level of income. • Consumer Spending and Income The consumption function describes the relationship between desired spending by consumers and the level of income. When consumers have more income‚ they will want to purchase more
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Consumption Narrative Consumer behaviour is the study of why and how consumers choose to purchase or not purchase. We are all consumers undertaking simple or complex purchases everyday of our lives. The purpose of this consumer portrait is to understand the framework of consumer decision process and its main influencing factors. This will be evaluated using my consumption journal‚ the theoretical concepts discussions‚ as well as the internal and external influencing factors such as culture‚ demographics
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International Journal of Education and Research Vol. 1 No. 5 May 2013 1 PATTERN OF FAST FOODS CONSUMPTION AND CONTRIBUTION TO NUTRIENT INTAKE OF NIGERIAN UNIVERSITY STUDENTS BY *AFOLABI‚ W.A.O.1 ‚ TOWOBOLA‚ S.K.1 ‚ OGUNTONA‚ C.R.B.1 and OLAYIWOLA I.O1 *Corresponding Author: Dr. Afolabi Wasiu Akinloye Oyebisi E-mail: afolabiwao@yahoo.com Telephone: +234- 803-4750-655 1Department Of Nutrition and Dietetics‚ College Of Food Science and Human Ecology Federal University of Agriculture
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utility states that: A. total utility is maximized when consumers obtain the same amount of utility per unit of each product consumed. B. beyond some point additional units of a product will yield less and less extra satisfaction to a consumer. C. price must be lowered to induce firms to supply more of a product. D. it will take larger and larger amounts of resources beyond some point to produce successive units of a product. 8. The first Pepsi yields Craig 18 units of utility and the second yields
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SECTION 2: TIME VALUE OF MONEY Decision problems in business usually involve a decision over whether to accept one alternative over another‚ or whether to implement a plan or not. In most cases‚ the effects of these decisions are felt in the future. Examples: Expand into a new market (geographical‚ consumer segment‚ etc.) or not? Now or later? Outsource production or keep it in-house? Grow organically or acquire a competitor? Or don’t grow at all? Purchase shares in Microsoft
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