4/11/2023 0 Comments Price consumption curve![]() Were a dollar per bar, now they're $2 per bar. My 1st dollar, I can't use these numbers, this is when the bars That's also true for, andĮven if I buy a fraction of the pound here. Most bang for my buck? My very 1st dollar, I canĮither buy half a bar here, I could buy half a here and I'm assuming that,įor the sake of simplicity let's assume that I get the same marginal utility per dollarįor the 1st half a bar and for the 1st bar. Would I get the most marginal utility per dollar? Where would I get the How would I spend my $5 now? My first dollar, where Now, how would I spend my $5? Let me do this a little bit, let me do it over here. Then the 4th bar is 20 points per dollar. Then the 3rd bar is 30 points per dollar. Giving these arbitrary units, 40 points per dollar. ![]() I'm getting 80 divided by 2 is 40 points, you know, and I'm just I'm still enjoying it butĮnjoying it a little bit less but I'm paying $2 for it. Then for that next bar, I get 80 marginal utility points. ![]() So 100 divided 2 is going to give me 50 marginal utility points per dollar. I'm still getting 100 points of marginal utility, but now it's $2. This is for what it was $1 per bar, this is now when it's $2 per bar. The marginal utility per dollar, this applies to both of these columns. Let's now assume that ourĬhocolate bars are $2. To plot our our demand curve and we can actuallyĭerive our demand curve from this information right over here. If we change the price and we get another quantity demanded, we're essentially starting To the quantity demanded? If you think about what we're doing it, we figured out with 1 price what was the quantity demanded, we demanded 3 bars. Utility per dollar over here? In particular, what happens When I change the price of the chocolate bars. What I want to do in this video is explore what happens On that 1st pound of fruit because the price of fruit were $2. Then it became equal to spendįor the 1st pound of fruit so then we spent the next $2 Then for the 3rd pound orįor the 3rd bar of chocolate. Then we got more for the 2nd chocolate bar for that 1st pound of fruit, so we spend it there. Utility points per dollar for that first chocolate bar and that was more than any than the first fruits, so that's where we spent it. Marginal utility per dollar for each incremental dollar we could spend on each of these goods and then just for eachĭollar maximizing it. That we could maximize total utility given our $5 spending by calculating the
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