Chapter 10 The Rational Consumer

Topics: Utility, Indifference curve, Consumer theory Pages: 188 (10747 words) Published: March 8, 2015
Econ 101: Principles of Microeconomics
Ch. 10: The Rational Consumer

Fall 2010

Herriges (ISU)

Chapter 10: The Rational Consumer

Fall 2010

1 / 28

Outline

1

Utility: Getting Satisfaction

2

Budgets and Optimal Consumption

3

The Optimal Consumption Choice

4

Spending the Marginal Dollar

5

From Utility to the Demand Curve

Herriges (ISU)

Chapter 10: The Rational Consumer

Fall 2010

2 / 28

The Rational Consumer
One of the key assumptions underlying economics is the concept of the rational consumer

Herriges (ISU)

Chapter 10: The Rational Consumer

Fall 2010

3 / 28

The Rational Consumer
One of the key assumptions underlying economics is the concept of the rational consumer ; i.e., that individuals know what they want and seek to make the most of the available opportunities given the scarcity constraints they face.

Herriges (ISU)

Chapter 10: The Rational Consumer

Fall 2010

3 / 28

The Rational Consumer
One of the key assumptions underlying economics is the concept of the rational consumer ; i.e., that individuals know what they want and seek to make the most of the available opportunities given the scarcity constraints they face.

Notice that there are two key components here:

Herriges (ISU)

Chapter 10: The Rational Consumer

Fall 2010

3 / 28

The Rational Consumer
One of the key assumptions underlying economics is the concept of the rational consumer ; i.e., that individuals know what they want and seek to make the most of the available opportunities given the scarcity constraints they face.

Notice that there are two key components here:
1

The notion that individuals have preferences: This defines what they want to consume.

Herriges (ISU)

Chapter 10: The Rational Consumer

Fall 2010

3 / 28

The Rational Consumer
One of the key assumptions underlying economics is the concept of the rational consumer ; i.e., that individuals know what they want and seek to make the most of the available opportunities given the scarcity constraints they face.

Notice that there are two key components here:
1

2

The notion that individuals have preferences: This defines what they want to consume.
The notion that individuals have constraints: These define what they can consume.

Herriges (ISU)

Chapter 10: The Rational Consumer

Fall 2010

3 / 28

The Rational Consumer
One of the key assumptions underlying economics is the concept of the rational consumer ; i.e., that individuals know what they want and seek to make the most of the available opportunities given the scarcity constraints they face.

Notice that there are two key components here:
1

2

The notion that individuals have preferences: This defines what they want to consume.
The notion that individuals have constraints: These define what they can consume.

In this chapter, we will
- Define more precisely what we mean by each of these notions.

Herriges (ISU)

Chapter 10: The Rational Consumer

Fall 2010

3 / 28

The Rational Consumer
One of the key assumptions underlying economics is the concept of the rational consumer ; i.e., that individuals know what they want and seek to make the most of the available opportunities given the scarcity constraints they face.

Notice that there are two key components here:
1

2

The notion that individuals have preferences: This defines what they want to consume.
The notion that individuals have constraints: These define what they can consume.

In this chapter, we will
- Define more precisely what we mean by each of these notions. - Use them to determine how the individual can then make choices so as to maximize their well-being (or utility).

Herriges (ISU)

Chapter 10: The Rational Consumer

Fall 2010

3 / 28

Utility: Getting Satisfaction

Utility
The first concept is that individuals have preferences

Herriges (ISU)

Chapter 10: The Rational Consumer

Fall...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Rational Consumer Essay
  • Are Consumers Rational? Research Paper
  • consumer Essay
  • consumer Essay
  • chapter 10 Essay
  • Chapter 10 Essay
  • Chapter 10 Research Paper
  • Chapter 10 Essay

Become a StudyMode Member

Sign Up - It's Free