Question

1 what is Chapter 5 Consumer demand Definition of Demand? Define Utility. How is Utility Related to Consumer Demand? Define Total utility. Define Marginal Utility. Define The Law of Diminishing Marginal Utility.

2.) Define Demand . Define Ceteris Paribus. How is Ceteris Paribus related to Supply and Demand ? Define the Law of Demand. Explain / Define What is a Demand Curve. Define Market Demand.

3.) Define Consumer Surplus. Define Total Revenue. Define Price Discrimination. Define Opportunity Cost. Define and Explain Consumer Maximizing Utility. Define Optimal Consumption

4.) What do Indifference Maps depict in economics

Answer 1

Definition of demand :

In economics, demand is the quantity of customers who are willing and able to buy at different price over a period of time. The relationship between the desired price and quantity is also called the demand curve.

Utility :

Utility means that the total satisfaction received from consuming a good or service. The economic utility of a service or good is important to understand because, it directly influences the deamd and therefore price of the service or good. When a consumer is maximizing utility the ratio of marginal utility to price is the same for all goods.

Total utility :

Total utility means as a quantifiable summation of satisfaction or happiness obtained from consuming multiple units of a particular service or goods.

Marginal Utility :

MU is the added satisfaction that a consumer gets from having one more unit of a good or service. Positive MU occurs when the consumption of an additional item increases the total utility.

Law of diminishing marginal utility :

It states that all else equal as consumption increases the MU derived from each additional unit declines. Marginal utility is derived as the change in the utility as an additional unit is consumed. In short, getting more and more of a good will cause to reduce utility.

2)

Ceteris paribus

Meaning :all other things remaining equal.

In economics, it acts as a short hand indication of the effect one economic variable has on another provided all other variables remain the same.

Economists says the law of demand shows that Ceteris paribus (all else being equal) more goods tend to be purchased at lower prices or that if demand for any given product exceeds the products supply Ceteris paribus prices will likely rise.

Law of demand :

The law of demand states that, conditional on all else being equal as the price of good decreases, quantity demanded increases, conversely as the price of good increases quantity demanded decrease.

Demand curve :

It is a graphical representation of the relationship between the price of a good or service and the quantity demanded for a given period of time.

The price will left vertical axis in the graph and the quantity demanded horizontal axis.

Market demand :

Market demand is describes the demand for a given product and who wants to purchase it. This is determined by how willing consumers are to spend a certain price on a particular good or service.

3)

Consumer surplus

Consumer surplus is the difference between the consumers willingness to pay a commodity and the actual price paid by them or the equilibrium price.

Total revenue :

Total revenue is the total receipts a seller can obtain from selling services or goods to buyers.

TR=P*Q

Price discrimination :

Price discrimination is a pricing strategy where identical or largely similar services or goods are transacted at different prices by the same provider in different markets.

Opportunity cost :

Opportunity cost means the loss of other alternatives when on alternative is chosen.

Opportunity cost= return on the best option not chosen - return on the best option chosen .

4)

An indifference map is a combination of indifference curves ,it shows to understanding how changes in the quantity or the type of goods may change consumption pattern.