Exercise questions No.1

Exercise questions No.1

Pls Download and answer all the questions below.

CONSUMER BEHAVIOR : CHAPTER 3

Consumer Behavior

Basics

• The Theory of Consumer Behavior, like the Law of Demand, can be explained by the Law of Diminishing Marginal Utility.
• Consumer Behavior is how consumers allocate their money incomes among goods and services.

Consumer Choice and Budget Constraint:

• Rational behavior:
  • The consumer is a rational person, who tries to use his or her money income to derive the greatest amount of satisfaction, or utility, from it. Consumers want to get "the most for their money" or, to maximize their total utility. Rational behavior also "requires" that a consumer not spend too much money irrationally by buying tons of items and stock piling them for the future, or starve themselves by buying no food at all. Consumers (we assume) all engage in rational behavior.
• Preferences:
  • Each consumer has preferences for certain of the goods and services that are available in the market. Buyers also have a good idea of how much marginal utility they will get from successive units of the various products they might purchase. However, the amount of marginal & total utility that the people will get will be different for every individuals in the group because all individuals have different taste and preferenes.
• Budget Constraint:
  • The consumer has a fixed, limited amount of money income. Because each consumer supplies a finite amount of human and property resources to society, he or she earns only limited income.
  • Every consumer faces a budget constraint
  • There is infinite demand, but limited income
• Prices:
  • Goods are scarce because of the demand for them. Each consumers purchase is a part of the total demand in a market. However, since consumers have a limited income, they must choose the most satisfying combination of goods based partially on prices. For producers, a lower price is needed in order to induce a consumer to buy more of their product.

Utility Maximizing Rule:

• To maximize satisfaction, a consumer should allocate his or her money so that the last dollar spent on each product, yields the same amount of marginal (extra) utility.
• When marginal utility are equivalent, consumer is in a equilibrium.

Marginal Utility per dollar:

• Rational consumers should compare extra utility from each product with its added price.
• Although spending all of one's income yields the greatest total utility, saving can be regarded as "commodity", that yields utility.
• MU/$ is found by taking the Marginal utility per good over the price of each good.
  • This can be used to determine a buying pattern, and to help figure out what goods will be bought when.
• • If marginal utility increases, then total utility increases
  • If marginal utility decreases, then total utility decreases

Algebraic Restatement:

• MU of product A/Price of A = MU of product B/price of B (this is when the consumer is at equilibrium)
• MU of A = 6units/Price of A = $1 < MU of B = 18units/Price of B = $2, therefore, 6 < 9 (This concludes that the consumer can increase total utility by purchasing more of product B than product A.
• MUa = MUb
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  Lecture notes : Chapter 3
  
  

Tutorial Note No.2

After reading the whole note,the student is expected to able to :

1. explain  supply and demand analysis.
2. Distinguish between a change in quantity DD & SS and a change in demand & supply.
3. Calculate elasticities and explain the concept of elasticties.
4. Understand how Government make Intervention in the Market.
5. Applies of supply and demand analysis.

Tutorial Note No.2

Tutorial No.2

 exercises No.2

 

Lecture Note : Chapter 2 - The Basics Of Supply and Demand.

One of the best ways to appreciate the relevance of economics is to begin with the basics of supply and demand. Supply demand analysis is a fundamental and powerful tool that can be applied to a wide variety of interesting and important problems. To name a few:

1. Understanding and predicting how changing world economic conditions affect market price and production.
2. Evaluating the impact of goverment price controls, minimum wages, price supports and production incentives.
3. Determining how taxes, subsidies, tariffs and import quotas affect consumers and producers.

LECTURE NOTE CHAPTER 2.

MES 3023 : Reference Books: Chapter 2.

To help all students, here accompanied ebook chapter 2 of the Textbook.

 

Chapter 2 Textbook.

MES 3023 : Reference Books: Chapter 1

To help all students, here accompanied ebook chapter 1 of the Textbook.

 

CHAPTER 1 

TUTORIAL NOTES NO:1

This is the NO:1 of my Tutorial  notes  of a microeconomics course MES3023 students.The Notes is posted on the Internet, and access is entirely free.I am grateful  for allowing it to be downloaded.

What is Microeconomics?
Economics is studied from two different perspectives, the macro view and the micro view. Macroeconomics is the study of the determination of economic aggregates such as national output, the level of employment, the price level and the rate of economic growth. Microeconomics studies resource allocation and income distribution as they are affected by the free working of the price system and specific government policies. How, for example, do firms and households make spending choices? What determines an individual's wages? How does the availability of public housing affect supply in the housing market? 


Scarcity, Choice and Opportunity Cost
Scarcity of resources forces everyone to make choices. For example, faced with a fast approaching mid-term exam, a student could either study or go to a party. In this case, the cost of having a good time can be measured in terms of lost marks on the mid-term. Such a cost is called an opportunity cost.Opportunity cost, the measurement of the cost of something in terms of forgone alternatives, is fundamental to the study of economics. This concept can be illustrated by a production possibilities frontier, a graphical representation of the combinations of goods and services that are just attainable when all of society's resources are efficiently employed. .

TUTORIAL NOTE NO:1

MES 3023: An Introduction to Microeconomics

The Scope of Microeconomic Theory.

The prefix micro- in microeconomics comes from the Greek word mikros, meaning small. It contrasts with macroeconomics, the other branch of economic theory. Macroeconomics deals primarily with aggregates, such as the total amount of goods and services produced by society and the absolute level of prices, while microeconomics analyzes the behavior of “small” units: consumers, workers, savers, business managers,
firms, individual industries and markets, and so on. Microeconomics, however, is not limited to “small” issues. Instead, it reflects the fact that many “big” issues can best be understood by recognizing that they are composed of numerous smaller parts. Just as much of our knowledge of chemistry and physics is built on the study of molecules, atoms, and subatomic particles, much of our knowledge of economics is based on the
study of individual behavior. Individuals are the fundamental decisionmakers in any society. Their decisions, in
the aggregate, define a society’s economic environment. Consumers decide how much of various goods to purchase, workers decide what jobs to take, and business owners decide how many workers to hire and how much output to produce. Microeconomics encompasses the factors that influence these choices and the way these innumerable small decisions merge to determine the workings of the entire economy. Because prices have important effects on these individual decisions, microeconomics is frequently called price theory.

Microeconomics is based on the belief that most behavior can be explained by assuming consumers have stable, well-defined preferences and they make rational market choices consistent with these preferences. This provides the foundation for building economic models.

A model is used to simplify reality from which conclusions are logically deduced about some system. A system is a group of units interacting to form a whole - For example, consumers and producers interact to form a market system.
Consider a model of consumer behavior with the following assumptions:
1. Consumer is rational and attempts to maximize satisfaction (utility)
2. Consumer has a fixed level of income
3. Commodities (goods and services) vary continuously, and utility consumer derives from them is measurable
4. Consumer has a given set of preferences for these commodities
5. Commodity prices are constant

NOTA KULIAH 1:(14 SEPT 2011)

MES 3023 - MICROECONOMICS

COURSE DESCRIPTION
This course will cover the area of economics commonly defined as microeconomics which is concerned with the individual parts of the economy such as individual businesses or industries, individual consumers, and individual products. Our goal is to study whether the economy uses our limited resources to obtain the maximum satisfaction possible for society. We will concentrate on three issues or goals: ALLOCATIVE EFFICIENCY, PRODUCTIVE EFFICIENCY, and EQUITY (efficiency, efficiency, and equity).

 MES 3023 - MICROECONOMICS

FAKULTI PENGURUSAN PERNIAGAAN DAN PERAKAUNAN

Peringatan: Kandungan Maklumat Semasa Kursus ini tidak boleh diubah tanpa kelulusan jabatan / bahagian berkenaan.

Academic year :	Semester 1 2009/2010
Code : Course : Credit hours :	MES 3023 MICROECONOMICS 3
Required Text Main references :	1.    Robert S.Pindyck dan Daniel L.Rubinfeld (2003), Microeconomics, 6th Edition, Prentice-Hall, New York 2.    Dominick Salvatore (2003), Microeconomics Theory and Applications. 4th Edition. Oxford University Press, Inc. 3.    Robert H.Frank (2003), Microeconomics and Behavior, 3rd edition, Mc Graw Hill. 4.    Jack Hirshleifer dan David Hirshleifer (1998), Price Theory and Applications, 6th edition, Prentice-Hall, New York
Teaching Tools/ Equipments :	White board, LCD Projector
Teaching & Learning Methods : Blog Learning:	Lecture, Assignment, Tutorial, Quiz and Mid Semester Examination http://lecture67.blogspot.com/
Lecturer : Tel / email :	TENGKU KHAIRI BIN TENGKU A.RAHMAN 0145433146 /  lecture67@gmail.com
Day / Lecture time : Room :	Wednesday 8am-10am. GC22
Grading	Aplia Exercises and Quizzes  (15%) Test (15%) Midexam (20%) Final Exam (50%)