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Managerial Economics, 8e
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Ebook
Chapter Outline
Diagnostic/Quiz+ Multiple-Choice Quizzes
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Chapter Review
Vocabulary Flashcards
Sentence Completion Exercises
Spreadsheet Exercises
Study Plan
Ebook
Chapter Outline
Diagnostic/Quiz+ Multiple-Choice Quizzes
Quiz Result
Chapter Review
Vocabulary Flashcards
Sentence Completion Exercises
Spreadsheet Exercises
Study Plan
Ebook
Chapter Outline
Diagnostic/Quiz+ Multiple-Choice Quizzes
Quiz Result
Chapter Review
Vocabulary Flashcards
Sentence Completion Exercises
Spreadsheet Exercises
Study Plan
Ebook
Chapter Outline
Diagnostic/Quiz+ Multiple-Choice Quizzes
Quiz Result
Chapter Review
Vocabulary Flashcards
Sentence Completion Exercises
Spreadsheet Exercises
Study Plan
Ebook
Chapter Outline
Diagnostic/Quiz+ Multiple-Choice Quizzes
Quiz Result
Chapter Review
Vocabulary Flashcards
Sentence Completion Exercises
Spreadsheet Exercises
Study Plan
Ebook
Chapter Outline
Diagnostic/Quiz+ Multiple-Choice Quizzes
Quiz Result
Chapter Review
Vocabulary Flashcards
Sentence Completion Exercises
Spreadsheet Exercises
Study Plan
Ebook
Chapter Outline
Diagnostic/Quiz+ Multiple-Choice Quizzes
Quiz Result
Chapter Review
Vocabulary Flashcards
Sentence Completion Exercises
Spreadsheet Exercises
Study Plan
Ebook
Chapter Outline
Diagnostic/Quiz+ Multiple-Choice Quizzes
Quiz Result
Chapter Review
Vocabulary Flashcards
Sentence Completion Exercises
Spreadsheet Exercises
Study Plan
Ebook
Chapter Outline
Diagnostic/Quiz+ Multiple-Choice Quizzes
Quiz Result
Chapter Review
Vocabulary Flashcards
Sentence Completion Exercises
Spreadsheet Exercises
Study Plan
Ebook
Chapter Outline
Diagnostic/Quiz+ Multiple-Choice Quizzes
Quiz Result
Chapter Review
Vocabulary Flashcards
Sentence Completion Exercises
Spreadsheet Exercises
Study Plan
Ebook
Chapter Outline
Diagnostic/Quiz+ Multiple-Choice Quizzes
Quiz Result
Chapter Review
Vocabulary Flashcards
Sentence Completion Exercises
Spreadsheet Exercises
Study Plan
Ebook
Chapter Outline
Diagnostic/Quiz+ Multiple-Choice Quizzes
Quiz Result
Chapter Review
Vocabulary Flashcards
Sentence Completion Exercises
Spreadsheet Exercises
Study Plan
Ebook
Chapter Outline
Diagnostic/Quiz+ Multiple-Choice Quizzes
Quiz Result
Chapter Review
Vocabulary Flashcards
Sentence Completion Exercises
Spreadsheet Exercises
Study Plan
Ebook
Chapter Outline
Diagnostic/Quiz+ Multiple-Choice Quizzes
Quiz Result
Chapter Review
Vocabulary Flashcards
Sentence Completion Exercises
Spreadsheet Exercises
Study Plan
Ebook
Chapter Outline
Diagnostic/Quiz+ Multiple-Choice Quizzes
Quiz Result
Chapter Review
Vocabulary Flashcards
Sentence Completion Exercises
Spreadsheet Exercises
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Chapter 3
Consumer Behavior and Rational Choice
Chapter Review
An indifference curve contains points representing market bundles among which the consumer is indifferent. If the consumer prefers more to less of both commodities, an indifference curve must have a negative slope.
Market bundles on higher indifference curves provide more satisfaction than those on lower indifference curves. Utility is a number that indexes the level of satisfaction derived from a particular market bundle. Market bundles with higher utilities are preferred over those with lower utilities.
The marginal rate of substitution shows how many units of one good must be given up if the consumer, after getting an extra unit of another good, is to maintain a constant level of satisfaction. To obtain the marginal rate of substitution, multiply the slope of the indifference curve by one.
The budget line contains all the market bundles the consumer can buy, given his or her money income and the price level of each commodity. Increases in only income push the budget line upward and parallel to the old budget line; changes in the price ratio alter the budget line's slope.
To attain the highest level of satisfaction compatible with the budget line, the consumer must choose the market bundle on the budget line that is on the highest indifference curve. This market bundle is at a point where the budget line is tangent to an indifference curve (unless there is a corner solution).
The consumer who maximizes utility will choose in equilibrium to allocate his or her income so that the marginal rate of substitution of one good for another good equals the ratio of the prices of the two goods (unless there is a corner solution).
The theory of consumer behavior is often used to represent the process of rational choice. Frequently a person or organization has a certain amount of money to spend and must decide how much to allocate to a number of different uses. This theory indicates how such decisions should be made.
A consumer's demand curve shows how much the consumer would purchase of a good at various prices of the good when other prices and the consumer's income are held constant. The theory of consumer behavior can be used to derive the consumer's demand curve, and the market demand curve can be obtained by summing the individual demand curves horizontally.
Consumer surplus is the difference between what a consumer is willing to pay for a good and what the consumer pays for the good in the market. Clever managers want to figure out pricing policies to extract consumer surplus from consumers.