1 / 8

Demand

Demand. Demand analysis - intuition. Marginal Cost/Marginal Benefit analysis of consumers If Marginal Benefit > Marginal Cost, buy it If Marginal Benefit < Marginal Cost, don’t buy it Marginal Benefit is reflected by what consumer is willing to pay. Marginal Cost is price of item.

jbritton
Télécharger la présentation

Demand

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Demand

  2. Demand analysis - intuition • Marginal Cost/Marginal Benefit analysis of consumers If Marginal Benefit > Marginal Cost, buy it If Marginal Benefit < Marginal Cost, don’t buy it Marginal Benefit is reflected by what consumer is willing to pay. Marginal Cost is price of item.

  3. Demand for Adam Humphrey’s Visa Service (based on individual’s willingness to pay) Depends on, • Price of Service • Individual’s Income • Price Associated with Doing it at Burger King • How much does the person really want to go to China or how big a hassle is it to come back. • Number of Individuals going to Chinese Consulate for visa.

  4. Demand for Adam Humphrey’s Visa Service

  5. Market Demand for Adam Humphrey’s Visa Service Obtained by summing all individual demands. Depends on, • All factors that affect individuals’ demands (price of service, income, price of related goods, tastes/preferences, expectation of future prices, etc.) • Number of Individuals (population)

  6. Individuals Can Demand Multiple Units

  7. Demand = Willingness to Pay Consumer Surplus (The value consumers get from a good but do not have to pay for.) P=35

  8. Demand Function for Good X QDx = f(Px, PY, M, H1 , H2, …) where, Px is the price of good X, PY is the price of good Y, M is income, H1 is size of population, H2 is consumers’ expectations,… On the prior graph for Adam Humphrey’s Service, QDx=50-Px

More Related