Please go through the slides and try to make a case study , follow APA style and give reference.The Theory of Individual Behavior
© 2017 by McGraw-Hill Education. All Rights Reserved. Authorized only for instructor use in the classroom. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Chapter 4

Learning Objectives
Explain four basic properties of a consumer’s preference ordering and their ramifications for a consumer’s indifference curves.
Illustrate how changes in prices and income impact an individual’s opportunities.
Illustrate a consumer’s equilibrium choice and how it changes in response to changes in prices and income.
Separate the impact of a price change into substitution and income effects.
Show how to derive an individual’s demand curve from indifference curve analysis and market demand from a group of individuals’ demands.
Illustrate how “buy one, get one-free” deals and gift certificates impact a consumer’s purchase decisions.
Apply the income-leisure choice framework to illustrate the opportunities, incentives, and choices of workers and managers.
© 2017 by McGraw-Hill Education. All Rights Reserved.
2

Consumer Behavior
Consumer opportunities
Set of possible goods and services consumers can afford to consume.
Consumer preferences
Determine which set goods and services will be consumed.
© 2017 by McGraw-Hill Education. All Rights Reserved.
4-3

Consumer Behavior

3

Properties of Consumer Preferences
© 2017 by McGraw-Hill Education. All Rights Reserved.
4-4

Consumer Behavior

4

Constraints
While any decision-making environment faces a host of constraints, the focus of managerial economics is to examine the role prices and income play in constraining consumer behavior.
© 2017 by McGraw-Hill Education. All Rights Reserved.
4-5

Constraints

5

The Budget Constraint
© 2017 by McGraw-Hill Education. All Rights Reserved.
4-6

Constraints

6

The Budget Constraint In Action
© 2017 by McGraw-Hill Education. All Rights Reserved.
4-7

0

Slope

Bundle G

Bundle H

Constraints

7

The Market Rate of Substitution
© 2017 by McGraw-Hill Education. All Rights Reserved.
4-8

0
Constraints

8

Changes in Income Shrink or Expand Opportunities
© 2017 by McGraw-Hill Education. All Rights Reserved.
4-9

0

Constraints

9

A Decrease in the Price of Good X
© 2017 by McGraw-Hill Education. All Rights Reserved.
4-10

0
New budget line
Initial budget
line
Constraints

10

The Budget Constraint in Action
© 2017 by McGraw-Hill Education. All Rights Reserved.
4-11

Constraints

11

The Budget Constraint in Action
© 2017 by McGraw-Hill Education. All Rights Reserved.
4-12

Constraints

12

Consumer Equilibrium
© 2017 by McGraw-Hill Education. All Rights Reserved.
4-13

Consumer Equilibrium

13

Consumer Equilibrium
© 2017 by McGraw-Hill Education. All Rights Reserved.
4-14

0

Consumer equilibrium

A

B
C
I
II
III
Consumer Equilibrium

D

14

Price Changes and Consumer Behavior
Price and income changes impact a consumer’s budget set and leve




Why Choose Us

  • 100% non-plagiarized Papers
  • 24/7 /365 Service Available
  • Affordable Prices
  • Any Paper, Urgency, and Subject
  • Will complete your papers in 6 hours
  • On-time Delivery
  • Money-back and Privacy guarantees
  • Unlimited Amendments upon request
  • Satisfaction guarantee

How it Works

  • Click on the “Place Order” tab at the top menu or “Order Now” icon at the bottom and a new page will appear with an order form to be filled.
  • Fill in your paper’s requirements in the "PAPER DETAILS" section.
  • Fill in your paper’s academic level, deadline, and the required number of pages from the drop-down menus.
  • Click “CREATE ACCOUNT & SIGN IN” to enter your registration details and get an account with us for record-keeping and then, click on “PROCEED TO CHECKOUT” at the bottom of the page.
  • From there, the payment sections will show, follow the guided payment process and your order will be available for our writing team to work on it.