PART 3 – DEMAND ANALYSIS

Readings:
Hirschey, M. (12th ed). Managerial Economics. (pp. 113– 147)
The law of diminishing marginal utility states that as an individual increases consumption of a given product
within a set period of time, the marginal utility gained from consumption eventually declines.
Indifference curve consists of combinations of goods and services that yield the same level of satisfaction
 A budget constraint represents
all combinations of products
that can be purchased for a
fixed amount.
By/Py=1500/250=6

Budget constraint
line

Bx/Px=1500/100=15
 Optimal
combination

Optimal
combination
 Engle curve is a plot of
relationship between income
and the quantity of consumed of
a good or service.
x
 ASSIGNMENT NO. 2 (Graded/individual work or pair work)

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