Economics Lecture Notes Review

• Consumer Role: 🛍️
  • Buys goods/services based on demand. 💰
  • Provides consumer trend information to producers. 📊
  • Pays indirect taxes (VAT). tax
• Positive Effects of Consumer Demand: 👍
  • Pays for goods/services, benefiting producers. ✅
  • Generates employment. 💼
  • Contributes to national income and economic growth. 📈
• Consumer Sentiment: 🧠
  • Mathematical measure of economic health based on consumer confidence. 📏
• Assumptions About Consumer Behavior: 🤔
  • Limited income. 💸
  • Seeks maximum utility. 🎯
  • Subject to diminishing marginal utility.📉
  • Acts rationally. 🤓
• Irrational Consumer Behavior: 🤪
  • Influenced by emotions/feelings, senses, and advertising/marketing. 😵
• Incentives to Influence Consumer Behavior: 🎁
  • Grants/subsidies for electric vehicles. 🚗⚡️
  • Minimum unit pricing on alcohol. 🍺🚫
  • Grants for energy-efficient home upgrades. 🏠💡
  • Help to Buy schemes for first-time homebuyers. 🏡🤝
• Taxation to influence consumer behavior. tax
  • Plastic bag levy. प्लास्टिक
  • Lowered VAT for hospitality/tourism during COVID. 🏨✈️
  • Carbon tax on fuels. ⛽️🌍
• Economic Good Characteristics: 🌟
  • Price: Commands a price due to scarcity relative to demand. 💰
  • Utility: Provides benefit or satisfaction. 💪
  • Transferable: Ownership can be transferred. 🤝
• Law of Diminishing Marginal Utility: 📉
  • As consumption increases, marginal utility decreases. ⬇️
  • Assumptions: No time has passed; income is constant; Doesn't apply to medical or addictive goods. ⏳
• Consumer Equilibrium: ⚖️
  • Achieved when there is no incentive to change spending patterns. 🧘
  • Equi-Marginal Principle: Consumer allocates income so that the ratio of marginal utility to price is equal across all goods. \frac{MUA}{PA} = \frac{MUB}{PB}
• Demand: 🛒
  • Quantity of goods/services consumers are willing to buy at various prices. 🛍️
  • Law of Demand: As price increases, quantity demanded decreases. ⬆️➡️⬇️
• Types of Demand: 📊
  • Individual: Single consumer. 👤
  • Market/Aggregate: All consumers. 👥
  • Effective: Willing and able to pay. 💰✅
  • Derived: Demand for a product due to its role in another product. 🔗
  • Composite: Multiple uses for a good. 用途
  • Joint: Demand for products used together. 🤝
• Demand Curve: 📈
  • Graph showing demand at different prices (negative slope). 📉
  • Movement: Change in price of the good itself. ➡️
  • Shift: Change in non-price determinants. 🔄
• Demand Function: ✍️
  • DX = f (PX, Pog, Y, E, T, U, G)
  • PX = Price of good (movement). 🏷️
  • Pog = Price of other goods (substitutes/complements). 🔄
  • Y = Income. 💰
  • E = Expectations. 🤔
  • T = Tastes. 😋
  • U = Unplanned factors. ❓
  • G = Government regulations. 🏛️
• Complementary Goods: 🧩
  • Used jointly; price increase in one decreases demand for the other. ⬆️➡️⬇️
• Substitute Goods: 🔄
  • Satisfy the same needs; price increase in one increases demand for the other. ⬆️➡️⬆️
• Normal Goods: ⬆️
  • Demand increases with income. 💰
• Inferior Goods: ⬇️
  • Demand decreases with income. 📉
• Consumer Expectations: 🔮
  • Expectations of future price changes affect current demand. ⏳
• Exceptions to the Law of Demand: ⚠️
  • Giffen Goods: Demand increases as price rises. 🤯
  • Status Symbols: High price increases attractiveness. 💎
  • Expectation-influenced: Expectation of rising prices increases demand. 📈
  • Addictive Goods: Consumption not rational. 🚬
• Supply: 📦
  • Quantity of a good firms are willing to provide at different prices. 🏭
• Economic Role of Firms: 🏢
  • Facilitate specialization. 💼
  • Provide options. ✅
  • Create employment. 💼
• Law of Supply: 📈
  • As price increases, quantity supplied increases. ⬆️
• Supply Curve: 📊
  • Graph of quantity supplied at various prices. 📈
• Supply Function: ✍️
  • Sy = f (Py, Pr, C, U, Tch, Tx, O, N)
  • Py = Price of good (movement). 🏷️
  • Pr = Price of related goods. 🔄
  • C = Cost of production. 🏭
  • U = Unplanned factors. ❓
  • Tch = Technology. 💻
  • Tx = Taxes. 🏦
  • O = Objectives of the firm. 🎯
  • N = Number of firms. 🔢
• Technology: 💻
  • Cost-reducing innovation affecting supply. 💡
• Taxation and Subsidies: 🏦
  • Affect cost of production and quantity supplied. 🏭
• Market Equilibrium: ⚖️
  • Where quantity demanded equals quantity supplied. 🤝
• Price Mechanism: ⚙️
  • Signals market changes. 📢
  • Transmits consumer preferences. 📡
  • Rationing function during shortages. ration
• Technology & Consumers: 📱
  • Price comparison websites. 💻
  • E-commerce. 🛒

- Booking platforms. ✈️