I. UNIT I

1. I. UNIT I . . B. CONSUMER BEHAVIOR AND UTILITY MAXIMIZATION 1. The law of diminishing marginal utility 2. Derivation of demand----- the equimarginal principle 3. The substitution effect 4. The income effect

2. Joe's Weekly Demand for Steak Price Quantity Demanded $2 1 lb. 1 2 lbs.

3. Joe's Weekly Demand for Steak Price Quantity Demanded $2 1 lb. 1 2 lbs. Price down, Joe can afford more. Price up, Joe can afford less.

4. I. UNIT I . . B. CONSUMER BEHAVIOR AND UTILITY MAXIMIZATION 1. The law of diminishing marginal utility 2. Derivation of demand----- the equimarginal principle 3. The substitution effect 4. The income effect

5. Joe's Weekly Demand for Steak Price Quantity Demanded $2 1 lb. 1 2 lbs. Joe thinks that Spam is a really good close substitute for steak and the price of Spam is 25 cents per pound.

6. Joe's Weekly Demand for Steak Price Quantity Demanded $2 1 lb. 1 2 lbs. Joe thinks that Spam is a really good close substitute for steak ...P of Spam = 25 cents/lb. If P of steak is $2, a pound of steak costs 8 lbs of Spam.

7. Joe's Weekly Demand for Steak Price Quantity Demanded $2 1 lb. 1 2 lbs. Joe thinks that Spam is a really good close substitute for steak ...P of Spam = 25 cents/lb. If P of steak is $2, a pound of steak costs 8 lbs of Spam. If P of steak falls to $1 per pound, a pound of steak costs 4 lbs of Spam. As a result, Joe will..........

8. Joe's Weekly Demand for Steak Price Quantity Demanded $2 1 lb. 1 2 lbs. Joe thinks that Spam is a really good close substitute for steak ...P of Spam = 25 cents/lb. If P of steak is $1, a pound of steak costs 4 lbs of Spam.

9. Joe's Weekly Demand for Steak Price Quantity Demanded $2 1 lb. 1 2 lbs. Joe thinks that Spam is a really good close substitute for steak ...P of Spam = 25 cents/lb. If P of steak is $1, a pound of steak costs 4 lbs of Spam. If P of steak rises to $2 per pound, a pound of steak costs 8 lbs of Spam. As a result, Joe will..........