11/4/11

• Every trade-off causes people to act differently after the fact
• When the price is too high, you are either not willing or unable
• You usually never buy the good; you buy the services that can be obtained from the good
• There is no correct way to consume something
• Prices force you to..
•  Prioritize what you want
• Think about values
•  Think about everyone else's values
• Why do I purchase less of something when it becomes more expensive? (Why do demand curves slope down?)
• Wealth Effects
• prices increase, you're poorer
• when poorer, you consume less
• Substitution Availability
• Diminishing Marginal 'Utility'
• each purchased good provides less satisfaction than the previous one
• What can be obtained from a chart?
• Marginal Values
• Total Expenditures
• amount of good x price of good
• Total Values
• "Buyers' 'Net' Gains"(Consumer Surplus)