How LDMU links to the demand : the demand for
curve : This
Individual demand
service
is
by one .
consumer
a
good or s
Chain of
reasoning :
·
How MI is the demand curve :
Market demand This : is the demand from all consumers
Consumers rational merket for
good
·
are in a a or service .
> ·
If MU measured in terms of
was
money
When the MU curve becomes a demand .
curve
6 Which Price
(P2) (Pu) When
with and whythey
would
weia
g MU MU has been
replaced > :
drops Ad
hig.
her
-
·
is
price
·
with then the units consumed
Similarly if priac
↳ the MU
price a ,
more
from Pr to Pr.
↳ In which costs benefits MU
=
price paid =
Psy
1
, ,
(P1) (3) When price Ad would decrease
↳ Where when making
>
-
: increases
purthechasing
.
is
decision
why
the consumer
a
MU/demand
t
Similarly when fewer units consumed at
are LBMU
↳
compares
-
↓
~
-
.
purchased
·
Assumptions of the theory :
·
Exceptions of the law :
Total/Marginal
-
-
ju
·
Consumers are
rational : lase of intoxicants
·
:
↳
Essential y that will to
- -
assumes consumers
try
make the best value of their better
.
money youred .
· Limitations of LDMU :
·
Continuous purchases :
·
Collectibles :
will Unit of measurement
purchase and people
Mis
6 Assumes that consumers
↳ E Rare items that .
collect ·
:
g.
.
single period of time cannot be measured it
the
good Satisfaction/utility numerically
consume in a .
↳
·
·
MoneyAs subjective and varies between people and time .
·
Constant MK of
money : someone
gets richer
they may value ·
, Analysis of the link
Background info This principle explains
·
· :
:
Link showed
through graph and examples ↳ Because of the
-
a :
Price
assumption of consumer
Equi-marginal utility The
from the lastmaximiz
· : consumer
2
assumed to re-allocate
of
As result of un
right rationality they
↑
good A
now
= 10 a a are
,
equi-marginal utility the MI
rato
their
gai n ed unit
piincreasethe a
= 10 as incorre
per
so on
money spent
each
good equal Consumer equilibrium A equili
4 ·
on is : consumer is in
if T 4
product A to B to
price ↳
=
relation ship
iqui-marginal utility So when pieofgood
2 inverse ins,
Formula
5belieequi-mergina utility thegained wouldto deceasemeaning
=
now-2 .
·
:
20
Marginal
purchase
less of
10
tility cause consumer
good A
good this shows relationship Consumer disequilibrium
consumerisindise
A
of
A ,
inverse
an ,
· :
similar to the inverse relationships that
the demand has This is the
curre
Process showed
.
↓
through numbers : link
.
· Table (L) Lem
:
A disequilibrium when
An
consumer is in :
↳ Quantity
if the
A -
↑ 1
! In this 3
by
-
overall satisfaction
case the consumer is
getting higher
a
Y
consuming goodof whichwoulthedsuggestthathmaybe
too e
and
consumi nga -
~
to consume
the
more
good of
a so NU decreases
balance and
less
good
y
so
My increases
causing a
equilibrium .
-
A conc
(2) and (5
Assumptions of
equi-marginal utility
·
:
·
However ,
·
Factors held constant : 3 lemon
↳
Income/budget change
of
,
in tastes and wants,
all held constant
limitations of the
equ-marginal utility theory : here the
prices goods are .
·
Unit of measurement :
Consumer information ↳ Uses cordinal-numerical
approach to calculate how much satisfaction ·
Concluding statements · How
·
: a a :
curve : This
Individual demand
service
is
by one .
consumer
a
good or s
Chain of
reasoning :
·
How MI is the demand curve :
Market demand This : is the demand from all consumers
Consumers rational merket for
good
·
are in a a or service .
> ·
If MU measured in terms of
was
money
When the MU curve becomes a demand .
curve
6 Which Price
(P2) (Pu) When
with and whythey
would
weia
g MU MU has been
replaced > :
drops Ad
hig.
her
-
·
is
price
·
with then the units consumed
Similarly if priac
↳ the MU
price a ,
more
from Pr to Pr.
↳ In which costs benefits MU
=
price paid =
Psy
1
, ,
(P1) (3) When price Ad would decrease
↳ Where when making
>
-
: increases
purthechasing
.
is
decision
why
the consumer
a
MU/demand
t
Similarly when fewer units consumed at
are LBMU
↳
compares
-
↓
~
-
.
purchased
·
Assumptions of the theory :
·
Exceptions of the law :
Total/Marginal
-
-
ju
·
Consumers are
rational : lase of intoxicants
·
:
↳
Essential y that will to
- -
assumes consumers
try
make the best value of their better
.
money youred .
· Limitations of LDMU :
·
Continuous purchases :
·
Collectibles :
will Unit of measurement
purchase and people
Mis
6 Assumes that consumers
↳ E Rare items that .
collect ·
:
g.
.
single period of time cannot be measured it
the
good Satisfaction/utility numerically
consume in a .
↳
·
·
MoneyAs subjective and varies between people and time .
·
Constant MK of
money : someone
gets richer
they may value ·
, Analysis of the link
Background info This principle explains
·
· :
:
Link showed
through graph and examples ↳ Because of the
-
a :
Price
assumption of consumer
Equi-marginal utility The
from the lastmaximiz
· : consumer
2
assumed to re-allocate
of
As result of un
right rationality they
↑
good A
now
= 10 a a are
,
equi-marginal utility the MI
rato
their
gai n ed unit
piincreasethe a
= 10 as incorre
per
so on
money spent
each
good equal Consumer equilibrium A equili
4 ·
on is : consumer is in
if T 4
product A to B to
price ↳
=
relation ship
iqui-marginal utility So when pieofgood
2 inverse ins,
Formula
5belieequi-mergina utility thegained wouldto deceasemeaning
=
now-2 .
·
:
20
Marginal
purchase
less of
10
tility cause consumer
good A
good this shows relationship Consumer disequilibrium
consumerisindise
A
of
A ,
inverse
an ,
· :
similar to the inverse relationships that
the demand has This is the
curre
Process showed
.
↓
through numbers : link
.
· Table (L) Lem
:
A disequilibrium when
An
consumer is in :
↳ Quantity
if the
A -
↑ 1
! In this 3
by
-
overall satisfaction
case the consumer is
getting higher
a
Y
consuming goodof whichwoulthedsuggestthathmaybe
too e
and
consumi nga -
~
to consume
the
more
good of
a so NU decreases
balance and
less
good
y
so
My increases
causing a
equilibrium .
-
A conc
(2) and (5
Assumptions of
equi-marginal utility
·
:
·
However ,
·
Factors held constant : 3 lemon
↳
Income/budget change
of
,
in tastes and wants,
all held constant
limitations of the
equ-marginal utility theory : here the
prices goods are .
·
Unit of measurement :
Consumer information ↳ Uses cordinal-numerical
approach to calculate how much satisfaction ·
Concluding statements · How
·
: a a :
