AGRICULTURAL ECONOMICS 200

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AGRICULTURAL ECONOMICS 200
NEXT THUR MIDTERM 1 SEE WEB

• PART 3 CONSUMER DECISIONS
• WK 3-5 INDIVIUAL DEMAND

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Part 3 Consumer Decisions

• Wk 3-3 Consumer Utility Marginal Utility
• Wk 3-4 Iso-utility Curves Budget Lines
• WK 3-5 INDIVIDUAL MARKET DEMAND
• Wk 4-1 Chg In Demand Quant Demanded
• Wk 4-2 Price Elasticity Of Demand
• Wk 4-3 Income Cross Elasticity
• Wk 4-4 Consumer Surplus Aggregate Demand
• Wk 4-5 Midterm 1

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Review
Chg In Gd 1
Chg In Gd 2
Inv PriceRatio
Marg RateOf Sub
Gd 1
Gd 2
Chg In Gd 1Chg In Gd2
Price Gd 2Price Gd1
Gd1 Price 1.00
Gd2 Price 2.50
25
5
Xx
Xx
Xx
2.5
-6/1 -6.0
1
-6
19
6
2.5
2
-5/1 -2.5
8
14
-5
-4
2.5
3
-4/3 -1.33
10
11
4
2.5
-3/4 -0.75
-3
7
15
5
2.5
-2
20
5
-2/5 -0.40
Marg Rate Of Sub ? G1/ ?G2
Inverse Price Ratio Price Of G2/Price Of G1
Opt Pt Where Mrs Is Closest To Inv Price Ratio
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Review
Since All Points Have A Utility Of 100, We Are
Indifferent As To What Combination We Purchase
(5,25)
(6,19)
(8,14)
(11,10)
(15,7)
(20,5)
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WK 3-5 INDIVIDUAL MARKET DEMAND
LEARNING OBJECTIVES
AFTER THE DISCUSSION, THE STUDENT SHOULD BE ABLE
TO
Define Demand By Equation, Table Or Graph.
Discuss Characteristics Of The Demand.
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I. Demand Equation Price - f( Demand)
Define Demand By Equation, Table Graph
Obj
1
Why?
The Price You Are Willing To Pay Depends On
Marginal Utility
Marginal Utility Depends on
Quantity Consumed
Independent Variable
Demand Quantity
Dependent Variable
Price
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Define Demand By Equation, Table Graph
Obj
1

• II. Demand Schedule A Graph Or Table That Show
  How Much Will Be Bought At Each Price Level

Quantity Of Good X
All Consumers
Consumer A
Consumer B
Price
3
9
12
.50
6
21
15
.25
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III. Demand Curves
Define Demand By Equation, Table Graph
Obj
1
All Consumers
Consumer A
Consumer B
Da
P
P
P
D1
Db
.50





.25

Q
3
6
15
Q
9
Q
12
21
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III. Definition Of Demand
Discuss Characteristics Of Demand
Obj
2

• _________Of A Good Or Service That A Consumer Is
  _______And ____To Buy In A Given______ Period
  Within A Relevant Range Of

Amount
Able
Willing
Time
Prices
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Discuss Characteristics Of Demand
Obj
2
IV. Demand Concepts
A. SlopeB. Relationship Between C. Shape
D. Dependent Variable E. Independent Variable
Negative
Inverse
Price Demand
Linear
Price
Quantity
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Discuss Characteristics Of Demand
Obj
2
F. Underlying Principle

• Law Of Diminishing Marginal Utility
• The More We Buy Of An Item, The Less
  Satisfaction We Get From Each Additional Unit

G. Degree Of Slope 1. lt1 Inelastic Quantity
Is Not Sensitive To Price Changes 2. 1 Unitary
Quanity Is Indifferent To Price Changes 3.
gt1 Elastic Quantity Is Sensitive To Price
Changes
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Summary
Wk 3-5 Individual Market Demand

• A Demand ____, _____,
• Or _____________
• Expresses The _______Relationship Between
  _____ And _______
• Demanded

Table
Graph
Equation
Inverse
Price
Quantity
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Self Assessment
__ 1.Slope Of Demand Curve __ 2. Quantity Not
Sensitive To Price __ 3. More Is Worth Less __4.
Willing And Able __5. Price - Quantity
Relationship __6. Quantity Sensitive To
Price __7. Time Relevant Prices __8. Quantity
Bought _at_ Each Price __9. Elastic Coefficient lt
1 __10 Elastic Coefficient gt1
D
E
F
A
D
C
A
A
E
C
A. Definition Of Demand B. Direct C. Elastic
Demand D. Inverse E. Inelastic Demand F. Law Of
Dim Marg Util G. Negative H. Positive I. None
Of The Above
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NEXT TOPIC
PART 3 CONSUMER DECISIONS
CHG IN DEMAND QUANT DEMANDED