Economics

Presented by Suong Jian & Liu Yan, MGMT Panel , Guangdong University of Finance.
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Chapter 4
CONSUMER DEMAND
QUESTIONS & ANSWERS
Q4.1 The expediency derived from consumption is intangible and unobservable. Therefore,
the expediency concept has no realistic value.@ Discuss this statement.
Q4.1 ANSWER
The utility derived from consumption is intangible, and therefore unobservable.
However, measurable run on their purchase decisions. Through their revealed
preferences, consumers convey their evaluation of the value, or worth, of individual
products. While the value derived through consumption is intangible, it leads to
purchase decisions that buttocks be monitored and responded to by firms.
Q4.2 Is an increase in lend utility or mirth following an increase in income
contrary with the law of diminish marginal utility?
Q4.2 ANSWER
No, the law of diminishing marginal utility states that the marginal utility derived
from consumption forget eventually diminish as consumption increases during a given
term period. This means that the addition to total utility per one dollar bill of income will
hightail it to fall as total income rises.



Despite the fact that total utility, or well-being,
tends to rise with income, it is typical that the marginal utility derived per dollar of
income tends to fall as income rises -- as is predicted by the law of diminishing
marginal utility.
Q4.3 Prospective car buyers are sometimes confronted by gross revenue representatives who argue
that they can offer a vehicle that is Ajust as cracking as a BMW, but at one-half the
price.@ handling the indifference concept to explain why the claims of the sales
representative are not credible.
Q4.3 ANSWER
If two products provide the same amount of satisfaction or utility, the consumer is
said to display indifference between the two. phlegm implies equivalence in the
eyes of the consumer. A consumer can be indifferent between goods and services
Chapter 4
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