Chapter 10 The Rational Consumer

Satisfactory Essays
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

You May Also Find These Documents Helpful

  • Better Essays

    Are Consumers Rational?

    • 1143 Words
    • 5 Pages

    Are consumers rational? Introduction Last couples of decades have witnessed the change of emphasis on study of consumers behaviour. Nowadays it is universally acknowledged that consumers behaviour has gradually transformed from rational buying to progressively impulsive purchase (Holbrook & Hirschman, 1982). Individuals’ perspectives towards commodities were no longer merely a concentration on utilitarian functions, instead, social and psychological utilities have become a significant yardstick…

    • 1143 Words
    • 5 Pages
    Better Essays
  • Good Essays

    Rational Consumer

    • 1036 Words
    • 5 Pages

    In economics a rational consumer is defined as the people who act in a rational way and make rational choices, namely spending their money wisely. Utility is a term used to measure the amount of pleasure a consumer gains from a good or service they choose to invest in, thus spending our money wisely, in economic terms is a method of maximizing our own utility. However in today’s world different societies and individuals have failed to distinguish the different between a want and a need, which…

    • 1036 Words
    • 5 Pages
    Good Essays
  • Satisfactory Essays

    Consumer Is Rational

    • 623 Words
    • 3 Pages

    Marketing creert vraag en behoeftes bij de consument die daarvoor niet aan wezig was,deze stelling ga ik verdedigen in de volgende essay.Onder marketing verstaat men meestal, het tegemoet komen van de behoeften en wensen van de consument, dit kan op twee manieren. Als eerst heb je het bevredigen van de consumenten om ze te geven wat zij nodig hebben en als tweede het overhalen van consumenten om behoeften te creeren die zij initieel niet hebben. Consumenten kunnen hun behoeften niet zelf controleren…

    • 623 Words
    • 3 Pages
    Satisfactory Essays
  • Powerful Essays

    Chapter 10

    • 25894 Words
    • 104 Pages

    ch10 Student: ___________________________________________________________________________ 1. Make this inductive (statistical) syllogism into a relatively strong argument by supplying an appropriate premise or conclusion: Greg must be into all that New Age stuff since he wears his hair in a ponytail. 2. Make this inductive (statistical) syllogism into a relatively strong argument by supplying an appropriate premise or conclusion: People who go to Burning Man are not like you and me.…

    • 25894 Words
    • 104 Pages
    Powerful Essays
  • Good Essays

    Chapter 10

    • 7054 Words
    • 46 Pages

    14e (Kotler) Chapter 10 Pricing: Understanding and Capturing Customer Value 1) ________ is the amount of money charged for a product or service. A) Value B) A demand C) Price D) A wage E) Salary Answer: C Diff: 1 Page Ref: 290 Skill: Concept Objective: 10-1 2) Price is the only element in the marketing mix that produces ________. A) revenue B) variable costs C) expenses D) outfixed costs E) stability Answer: A Diff: 2 Page Ref: 290 Skill: Concept Objective: 10-1 3) ________…

    • 7054 Words
    • 46 Pages
    Good Essays
  • Satisfactory Essays

    Chapter 10

    • 265 Words
    • 1 Page

    Chapter 10 Key Terms Customer Retention – the continuous attempt to satisfy and keep current customers actively involved in conducting business. Churn (or churn rate) – the number of customers who leave a business in a year’s time divided by the number of new customers in the same period. Defection rate – the percentage of customers who leave a business in one year. Customer lifetime value – the net present value of profits a customer generates over the average customer life. Customer intelligence…

    • 265 Words
    • 1 Page
    Satisfactory Essays
  • Satisfactory Essays

    chapter 10

    • 628 Words
    • 3 Pages

    Chapter 10 Discussion Questions Be prepared to discuss the handout I gave you entitled “Take the Road to IT Value” Be prepared to discuss the mini-case “Budgeting at Performance Boards, Inc.” For each category of IT governance risk, come up with at least one control. Be prepared to discuss the pros and cons of each of the three main methods of “Funding Information Systems” What are the three characteristics that effect project risks? Look at the IT project portfolio profiles and be ready to…

    • 628 Words
    • 3 Pages
    Satisfactory Essays
  • Good Essays

    chapter 10

    • 4684 Words
    • 19 Pages

    Chapter 10—Developing and Managing Products MULTIPLE CHOICE 1. When the manufacturer of L’Oreal shampoo introduced shampoos designed specifically to appeal to preteens, the product was: e.a.b.a.a.c.b.c.e.b.e.c.a.d.e.b.d.e.a.c.b.b.d.e.c.d.b.d.b.a.b.e.d.c.c.a.a.b.b.e.a.b.b.b.c.b.e.a.d.c.b.d.c.a.e.b.e.a.e.e.a.c.b.a.d.e.a.d.a.c.d.c.e.d.b.c.c.d.b.e.a.c.d.e.d.b.a.e.a.e.c.a.d.e.e.e.a.c.d.b.a.c.b.a.d.d.a.b.c.b.a.e.c.a.c. a new product because it was an improvement or revision of an existing product…

    • 4684 Words
    • 19 Pages
    Good Essays
  • Satisfactory Essays

    Chapter 10

    • 536 Words
    • 3 Pages

    chapter 10 Chapter Test Area Results of the quiz. 1. Find the area of ΔABC. The figure is not drawn to scale. * CORRECT: 23.14 cm2 2. Find the area of a parallelogram with vertices at P(–8, –3), Q (–7, 3), R(–9, 3), and S(–10, –3). * CORRECT: 12 square units 3. A slide that is inches by inches is projected onto a screen that is 3 feet by 7 feet, filling the screen. What will be the ratio of the area of the slide to its image on the screen? * CORRECT: 1 : 12,544 4. Find the…

    • 536 Words
    • 3 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Chapter 10

    • 489 Words
    • 3 Pages

    CHAPTER 10: COST OF CAPITAL HOMEWORK 1. The Dempere Imports Company’s EPS in 2009 was $2.82, and in 2004 it was $1.65. The company’s payout ratio is 30%, and the stock is currently valued at $41.50. Flotation costs for new equity will be 15%. Net income in 2010 is expected to be $15 million. The market-value weights of the firm’s debt and equity are 40% and 60%, respectively. a. Based on the five-year track record, what is Dempere’s EPS growth rate? What will the dividend be in 2010?…

    • 489 Words
    • 3 Pages
    Satisfactory Essays