séance 2 Flashcards
what is the definition of individual demand?
A consumer’s individual demand is the relationship between the price and the quantity purchased at that price
what is the rule for buyers when thinking at the margin?
buyers will buy as long as MV(q)>P
the MV(q) curve also represents the …
MV(q) curve = demand curve d(q)
how to compute consurmer surplus?
CS = total valuation - expenses
when does consumer maximizs profit?
when P=MV(q)
TF: thinking at the margin doesn’t give the same result as surplus maximization
F: surplus maximization gives the same results as thinking at the margin
on the graph, what represents the total valuation?
surface under the MV(q) curve up until the qty bought
what is the link between valuation and individual demand
Because an individual will choose q such that MV(q) = P, the consumer’s demand curve coincides with her marginal valuation curve.
what is the definition of qty demanded
The quantity demanded of a good is how much of that good an individual or a population is willing and able to purchase, at a given price.
what is the definition of demand?
The demand for a good is the relationship between the price and the quantity demanded of that good
define the particularities of the law of demand
for most goods, the demand curve is downward sloping: price and qty are inversely related. holding other things equal, a consumer will want to purchase more of a good as its price goes down
what is market demand?
it is the aggregate demand of an entire population
what is the market qty demanded?
it is the sum of qties demanded by all individuals
what does the market demand curve represents?
it represents the horizontal sum of all individual curves (you obtain it by adding qties, never add prices)
what is to be considered when looking at the demand function?
the demand fct explains how the qty demanded for a good varies when the price of the good changes, supposing that all other factors potentially affecting demand are all held constant
