Κεφάλαιο 11: Καταναλωτική Επιλογή και Ζήτηση

Chapter 11: Consumer Choice and Demand

• Consumer Choice: The presentation is about consumer choices and demand from a microeconomics perspective
• Budget Constraint: The budget constraint (also called the income-consumption line or budget line) is a graphical representation of all the commodity bundles that a consumer can afford given current prices and income. The limitation of the consumer's choice is determined by the combination of both income and existing prices
• Optimal Consumption: Consumers aim to maximize their utility (satisfaction) given their budget constraint by selecting bundles of goods/services. The goal is to select the commodity bundle on the highest attainable indifference curve. The optimal choice where the budget line is tangent to an indifference curve.
• Indifference Curves (ICs): These curves show various combinations of two goods/service that provide the same level of utility to the consumer. An indifference curve is a graphical representation that depicts all combinations of two goods that provide a consumer with the same level of satisfaction (utility). The indifference map consists of a set of indifference curves; they are unique, negatively sloped and convex to the origin, and they never intersect.
• Marginal Rate of Substitution (MRS): This is the rate at which a consumer is willing to trade one good for another while maintaining a constant level of satisfaction.
• Consumer Equilibrium: Consumer equilibrium or consumer optimization occurs where the indifference curve is tangent to the budget constraint. This point reflects the combination of goods/services the consumer can afford that provides the highest possible satisfaction.
• Changes in Income: An increase in income shifts the budget line outwards, allowing the consumer to reach a higher indifference curve and consume more of both goods. Conversely, a decrease in income shifts the budget line inwards, limiting the consumer's consumption possibilities.
• Changes in Prices: A change in the price of one good causes the budget line to pivot, altering the optimal consumption bundle.
• Derivation of the Demand Curve: The demand curve comes from the individual consumer's response to varying prices of a particular good while holding all else constant.
• Utility Theory: The study of decision-making of humans/consumers who seek to maximize their utility satisfaction, and minimizing costs.
• Marginal Utility: Refers to the additional satisfaction a consumer receives from consuming an additional unit of a good or service. The law of diminishing marginal utility states that as more units of a good are consumed, the additional satisfaction (marginal utility) from each additional unit decreases.
• Budget Line: The budget or income-consumption line represents the combinations of goods and services a consumer can afford with their current income and prevailing prices. A decrease or increase in income will shift this line respectively, affecting the attainable choice set
• Demand Function: Reflects the relationship between the price of a good and the quantity demanded by a consumer
• Consumer Surplus: The difference between what a consumer is willing to pay for a good and what they actually pay. This is a measure of consumer benefit.