Abstract and presentation for the economics lesson "Consumer Behavior. The Problem of Rational Choice" - Grebenshchikova I.N.
Slide 1
Slide 2
Rational consumer behavior consumer behavior structure of consumer needs rational adoption of consumer decisions Consumer economics
Slide 3
Consumers in the economy: households and individuals as consumers of goods and services, firms (producers) as consumers of investment goods, the state as a consumer of goods and services in order to meet public needs, personal consumption, industrial consumption, public consumption.
Slide 4
Think about the difference in consumer behavior in market and command-administrative economic systems? In market conditions, the consumer’s choice is to maximize utility from the consumption of goods and services. What other factors can you name that influence consumer choice?
Slide 5
Utility of goods Limited resources Fashion and dynamics of social demand Period of consumption (short-term and long-term consumption goods) Consumer choice
Slide 6
Remember the definitions of the concepts: “good” “free goods” “economic goods” good Everything that a person uses to satisfy his needs. free goods Goods that are available to any consumer and do not require giving up other goods, i.e. can be consumed in unlimited quantities. economic goods Goods, the available volume of which is less than the need for them. These benefits are created by man and are not found anywhere in nature.
Slide 7
Slide 8
Only that good that has utility for the consumer can satisfy his needs. Utility The satisfaction a person receives from consuming a product or service. Subjective assessment of a product, which depends on the character, habits, taste, mood of the consumer and the conditions in which he finds himself.
Slide 9
Total marginal utility The total utility of the total volume of goods consumed. The more quantity of a good is consumed, the greater its utility. At the same time, each subsequent unit of the good becomes less valuable as the consumer becomes saturated. The additional utility gained from consuming one more unit of a good. Law of Marginal Utility:
Slide 10
Document MU = DU/X MU - marginal utility; U - utility; X - quantity of goods; D-small change Friedrich von Wieser, economist, representative of the Austrian school in political economy.
Slide 11
2. Consumer income and expenses Income is funds in cash or in kind received as a result of the economic and financial activities of individuals, enterprises and the state. Nominal income Real income Disposable income amount of money received by individuals during a given period amount of goods and services that can be purchased with nominal income, taking into account changes in the price level Nominal income minus taxes and mandatory payments
Slide 12
Sources of formation of nominal income Income from professional activities or salary Transfer payments - gratuitous payments from the state (pensions, benefits) Income received through the credit and financial system (state insurance, interest on bank deposits, bank loans for individual housing construction, income from shares, bonds, lottery winnings, damage compensation payments)
Slide 13
Sources of formation of nominal income Factor income (rent, interest, ...) Income from personal subsidiary plots Income from business activities
Slide 14
In a market economy, protecting income from inflation is of particular importance. Indexation – an increase in nominal income depending on rising prices
Slide 15
The quantity and quality of goods that can be purchased with income depend not only on the amount of income, but also on the rationality of expenses. Expenses consumption savings food products non-food products services taxes bank accounts securities (shares) real estate insurance
Slide 16
Minimum necessary discretionary expenses for food, clothing, transportation, utilities, etc. for a tourist trip, for the purchase of books, for the purchase of a car, etc.
Slide 17
Engel's Law As income increases, the share spent on essential goods decreases, and the share spent on luxury goods increases.
Slide 18
factors influencing the income of the population; expenses of the population; level of qualifications; salary; dynamics of retail prices; saturation of the consumer market with goods; scale and efficiency of entrepreneurial activity; inflationary rise in prices; saturation of the consumer market with goods; level of public confidence in banks; level of income
Slide 19
Preparing for the exam: 1. A typical feature of consumer behavior is 1) increasing attention to the quantity of goods rather than their quality when income increases 2) refusal to buy expensive things when income increases 3) increased spending on expensive goods when income decreases 4) spending most of the income of poor families on clothing 2. Which of the following examples illustrates rational consumer behavior? 1) searching for information about the product 2) searching for the most popular product 3) assessing the quality of the product based on its price 4) following advertising
Slide 20
3. Which of the following is an example of a violation of consumer rights? 1) lack of possibility of purchasing on credit 2) lack of advertising of goods 3) high price of goods 4) lack of reliable information about goods 4. Violation of consumer rights guaranteed by law is 1) commodity shortage 2) market price of consumer goods 3) lack of information about goods 4 ) insufficient quantity of goods in warehouse
Slide 21
5. What are the typical features of rational consumer behavior? 1) reduction of expenses on expensive goods with an increase in income 2) with any increase in income, no limit on spending money on food 3) increasing attention to the quality of goods with an increase in income 4) with consistently high incomes, refusal to purchase expensive goods 6. Typical features of consumer behavior behaviors include 1) spending a large part of the income of poor families on food, clothing, housing 2) increasing the growth of expenses on expensive items in a greater proportion than income 3) decreasing attention to the quality of goods when income increases 4) increasing expenses on expensive goods when income decreases Slide 23 
10. To maintain and increase their income, the consumer can 1) transfer part of it to a charitable foundation 2) open a bank account 3) make a purchase on credit 4) lend part of the income to friends
Slide 24
12. An increase in consumer spending is influenced by 1) an increase in income tax 2) a decrease in social benefits 3) an increase in consumer income and a decrease in labor productivity 13. What is a mandatory consumer expense? 1) transportation costs 2) purchase of securities 3) payment for the services of an apartment interior designer 4) property insurance
Purpose: studying the theory of consumer behavior.
Lesson objectives:
1. Educational:
determine the initial components of the theory of consumer behavior;
characterize different approaches to measuring utility;
identify features of types of utility assessments and properties of indifference curves.
2. Developmental:
analyze objects;
focus on understanding the reasons for academic success;
formulate your own point of view;
search for the necessary information, highlight the main thing.
3. Educational:
formation of a worldview corresponding to the modern level of economic knowledge;
formation of the student’s civic position as an active participant in the economic process;
Technologies: problematic dialogue
Teaching methods: problem-search
Forms of organization of cognitive activity: individual, group.
Resources for the lesson: presentation “Theory of Consumer Behavior” (2 lessons).
Basic concepts: utility, cardinalist (quantitative) approach and ordinalist (ordinal) approach to utility measurement; total utility, marginal utility, diminishing marginal utility, indifference curves, indifference curve map.
Planned results:
Subject:
Learn to: identify the initial components of the theory of consumer behavior; characterize different approaches to measuring utility; identify features of types of utility assessments and properties of indifference curves.
They will have the opportunity to learn: analyze objects; focus on understanding the reasons for academic success; formulate your own point of view; search for the necessary information, highlight the main thing.
Metasubject UUD:
Cognitive: establish cause-and-effect relationships and dependencies between objects; complement and expand existing knowledge and ideas about rational consumer behavior; build logical chains of reasoning; search for the necessary information.
Communicative: formulate dialogical statements, understand the partner’s position, including those different from their own, coordinate actions with the partner; enter into collective educational cooperation.
Regulatory: maintain the goal of an activity until its result is obtained; exercise independent control of their activities.
Personal UUD:
They motivate their actions and show interest in new educational material. Evaluate their own educational activities.
During the classes
I. Organizational moment
Goals: creating an emotional mood and conditions for setting a learning task through problematic dialogue; activation of students’ mental activity, interest in the upcoming work.
Slide No. 2 is shown.
Teacher: Good afternoon! Today we are witnessing a variety of customer preferences. Each visitor chooses the product he needs. Let's analyze the images and tell us, what dictates the choices of different buyers?
Student: one buyer makes a choice in favor of vegetable and meat products.
Student: Another customer, probably a child, makes a choice in favor of sweets.
Student: the third buyer buys dairy products.
Teacher: So we can say that different customers choose different products. And the question is why does this happen?
Student: Each age group has its own needs, its own economic interests.
Teacher: So, what are we going to talk about in class today?
Student: About consumer behavior, about rational choice.
Teacher: So, economic interest is a form of manifestation of economic needs. Needs form demand, which largely depends on the tastes and preferences of people (slide No. 3). All people are capable of comparing the satisfactions obtained from different activities and products, and preferring some types over others. But it’s one thing to desire this or that product and another thing to acquire it, i.e. our choice, unlike desires, will be limited in some way. Let's try to figure out what determines the behavior of this or that consumer? Let’s open a notebook and write down the topic of the lesson “Consumer Behavior. The problem of rational choice." (slide number 4).
Slide No. 5 is shown - So, you have a buyer in front of you and his choice is limited in some way? (students analyze the images on the slide and draw conclusions).
Student: The choice is limited by prices and income. (slide No. 6)
Teacher: Okay. Then, let's try to evaluate the following products and consider the following situation, the so-called “paradox of water and diamonds” (slide No. 7-8).
Why is water, without which life is impossible, so cheap, but diamonds, which are far from being the most essential benefit, are very expensive?
Is the population of our planet (or at least the country) ready to give up water for diamonds?
Are each of us ready to give up one liter of water to get one diamond?
Students (the process of discussing answers should lead to the concept of utility): the price of water is low, since the supplies of water available to each individual under normal conditions are very large, and sometimes unlimited. The usefulness of diamonds is much lower than the usefulness of water, but their price is high, since diamond mining and processing are expensive. That's why they are expensive. If a person in the desert were offered a choice: water or diamonds, then, of course, he would choose water. And in modern conditions, each of us would choose diamonds.
Teacher: slide No. 9 - notebook entry: Utility is an indicator of the degree of satisfaction caused by the consumption of any set of goods and services or any individual product.
The concept of “utility” is subjective in nature, since each consumer in his own way, individually, depending on his personal interests, tastes, and needs, evaluates the satisfaction that he can derive from the consumption of a given product or service. At the same time, “utility” as an economic concept is not identical to the concept of “benefit”. By satisfying one's needs, a person does not always derive benefits for himself and his health (for example, alcohol and tobacco). (slide No. 10)
And how is this issue considered in the history of economic thought?
(Slide No. 11 - notebook entry): “Utility” was first introduced into scientific circulation by the English philosopher I. Bentham. However, neither he nor the economists of his time understood the connection between the value of a commodity and the utility derived from its consumption. What other economists have argued about utility. So, let's move on to checking the homework, which is aimed at clarifying the question: “Utility and rational choice of the buyer.”
II. Survey of students on the material assigned at home.
Goals: creating conditions for activating knowledge through reflection and the ability to carry out a comprehensive search for economic information on the topic.
The teacher and students discuss the compiled and filled out table on the topic: “Utility and rational choice of the buyer in the history of economic thought,” where two names of economists were proposed by the teacher for study, and students chose one representative independently, based on their interests.
Table No. 1
“Rational choice of the buyer in the history of economic thought” (slide No. 12).
The process of discussing answers should lead to the concepts of total and marginal utility of a product and to the question of how utility is measured.
III. Studying new educational material.
Objectives: study in economic theory two approaches to measuring utility, identifying the total and marginal utility of a product and characterizing tools for analyzing consumer behavior.
*How is utility measured? (slide number 13 - recording)
Economic theory knows two versions of the theory of utility, or rather, two approaches to its measurement: cardinalist (quantitative) and ordinalist (ordinal).
The cardinalist approach to utility measurement presupposes an absolutely precise, like a physical quantity, quantitative determination of the value of utility. As a measure of utility, cardinalists used a conditionally objective unit called “util.” (slide No. 14) Moreover, the greater the utility, the higher the quantitative assessment of the benefit (write in a notebook). For example, a bar of chocolate brings a utility of 4 utils, and a kilogram of meat - 6 utils, etc. Then, what will be the universal and accurate unit of utility - this approach did not provide an answer. (slide No. 15)
And cardinism was replaced by the ordinalist approach. The term “ordinary” itself means “ranked” or arranged in a certain order: 1st, 2nd, 3rd, etc., a certain ranking is allowed, the construction of a number of goods and services according to the principle of preference. (slide No. 16 - recording)
The consumer cannot accurately judge the quantitative sizes of ordinal numbers, but can only say something about the degree of importance relative to each other. Modern economists start from assumptions about the ranking and sequence of choices and from observed facts about them. Such an approach does not require any psychological interpretation of such choices. What is called utility today reflects a ranking of preferences. (slide No. 17-18)
*What types of assessments are primarily important to the consumer? (slide No. 19 - recording).
Total utility is a measure of the overall satisfaction obtained from consuming a good or set of goods and services over a given period of time. (slide No. 20 - recording)
The marginal utility of a good is the change in total utility caused by a change in the consumption of a given good or service by one unit, provided that the consumption of other goods remains unchanged. (slide No. 21 - recording)
In economic literature, it is customary to denote marginal utility as MU and total utility as TU. Suppose we are measuring the marginal utility of some good X. With these notations, the algebraic expression for the marginal utility of good X will look like this:
MUх= , (slide No. 22 - recording)
An increase in overall utility as consumption grows is consistently accompanied by a decrease in the rate of increase in utility. This phenomenon is called diminishing marginal utility. (slide No. 23 - recording)
Economists have called the decline in marginal utility the law of diminishing marginal utility, which can be stated as follows: if the consumption of all other goods remains fixed, then the marginal utility of a given good will decrease as its consumption increases within a certain period of time. (slide No. 24 - recording)
This law does not say what is not liked, for example, visiting the cinema again. It simply states that the consumer does not rate it as highly as the first visit. At the same time, time is an important factor in the process of such an assessment: if the first visit took place last year, then in the new year the second visit will be valued just as highly. The law of diminishing marginal utility in most cases applies specifically to short time periods. (slide No. 25)
*What are indifference curves and what properties do they have? (slide No. 26 - recording)
The main tool for analyzing consumer behavior is indifference curves. If the consumer does not care which combination to prefer, then he is in a position of indifference. (slide No. 27 - recording)
An indifference curve is a set of points at which alternative combinations of two goods that bring equal satisfaction are located, and the buyer is indifferent to the choice between them. (slide No. 28 - recording)
Let's consider the indifference curve (slide No. 29 - Figure 1)
Indifference curve (Fig. 1)
Figure 1 shows a typical indifference curve with a negative slope. The quantity of product X is measured on the horizontal axis, and the quantity of product Y is measured on the vertical axis.
All possible combinations of goods X and Y presented on the indifference curve provide the consumer with the same level of utility. In other words, the consumer does not care at which point of the curve he is: say, at point A with 15 units. product X and 53 units. product Y, or at point B with 38 units. X and 30 units. Y, etc. (slide No. 30)
The indifference curve has a negative slope, which reflects the fact that the buyer receives satisfaction from both goods under the following condition: if he increases his consumption of good X, he must give up the known good Y in order to maintain his overall level of utility. (slide No. 31-entry)
The indifference curve has a convex shape, i.e. concave inward. This shape of the curve means that the consumption of X is growing relative to the consumption of Y, while the buyer is constantly giving up a decreasing amount of Y for a constant increase in the amount of X. (slide No. 32-entry)
The set of indifference curves forms a map of indifference curves (slide No. 33 - Figure 2 and definition entry).
An indifference map is a set of indifference curves, each representing a different level of utility.
Let's consider the map of indifference curves (Fig. 2)
Graph in Fig. 2 illustrates a typical map of indifference curves U1, U2, U3, U4. Any indifference curve that lies above and to the right of another represents a higher level of consumption (utility). Hence, every combination of goods X and Y located on the U4 curve is preferable to every combination on the U3 curve, etc. All sets of goods on the same curve are equivalent to each other. And any combination of goods located on a higher curve will be more preferable. There are only four curves on the graph. In fact, there may be much more of them, since the number of bundles of goods X and Y contains an infinite number of indifference curves. (slide No. 34)
Summarizing the properties of indifference curves, we should point out the following main features:
An indifference curve that lies above and to the right of another curve represents more preferred bundles. In this case, a new indifference curve can be drawn between any two curves.
The second feature is directly derived from the first: indifference curves never intersect or touch each other. (slide number 35 - recording)
An indifference curve always has a negative slope. A negative slope indicates that an increase in the quantity of one good is accompanied by a decrease in the quantity of another good included in the bundle.
The absolute slope of the indifference curve decreases as you move downward along it to the right (the curve is convex relative to the origin). (slide No. 36 - recording)
All these properties of curves in economic theory have been proven strictly mathematically. The basis for judgments about the properties and features of indifference curves was laid by the English economist F. Edgeworth (1845-1926). (slide No. 37)
Indifference curves are an analytical tool for determining what the buyer wants to buy, where we will be interested in another question.
*What is the marginal rate of substitution and what does it characterize?
The marginal rate of substitution of product X for product Y measures the consumer's desire (propensity) to exchange one product for another. It represents the maximum amount of good Y that a consumer is willing to give up in order to obtain one additional unit of good X, while maintaining a constant overall level of satisfaction. (slide 38 - recording)
The marginal rate of substitution (MRSxy) of product X for product Y is equal to:
MRSxy= (slide No. 39 - recording)
The question remains to be answered: why is the consumer willing to sacrifice a decreasing quantity of one good in order to purchase a unit of another good?
Recall the law of diminishing marginal utility. We always value more what we have less of. As the indifference curve moves from top to bottom, an individual has less and less of good Y at his disposal, therefore, its value increases, and there is more of good X, and their value decreases. (slide No. 40)
The concept of “marginal rate of substitution” in the ordinal version of the theory of consumer behavior has the same meaning as “marginal utility” in the quantitative version.
IV. Consolidation of educational material.
Students are offered the following tasks.
Task 1. For each concept given in the left column of the table, select its definition from the right column: (slide No. 41-42)
Definition
Overall usefulness
A. Prices for goods are based not on total utility, but on marginal utility.
Marginal utility
B. As the quantity of a good consumed increases, the marginal utility of an additional unit of the good decreases.
Law of Diminishing Marginal Utility
B. The satisfaction that people receive from consuming the entire amount of goods of a given type available to them.
The paradox of water and diamonds
D. The increase in total utility with an increase in the volume of consumption of a given product by one unit.
Task 2. Fill in the missing words in the statements below: (slide No. 43)
The increase in utility caused by increasing the volume of consumption of a product is called (marginal) utility.
As the total volume of goods increases, the marginal utility of each additional unit of goods (decreases).
The total utility curve has a (positive) slope.
Total utility reaches its maximum value when marginal utility is (zero).
The law of (inverse) dependence of quantity demanded on price follows from the law of diminishing marginal utility.
V. Homework (slide No. 44)
steam. 5.1 and 5.3; analyze indifference curves;
pp. 136-137 questions 1, 2 and 3 answer the questions orally;
Related educational materials:
Consumer A consumer is a person or organization
who use, consume the products of someone else's production, someone else's activity.
Consumer is a citizen who has intentions
order or purchase or ordering,
purchasing or using goods (work,
services) exclusively for personal, family,
household and other needs not related to
carrying out business activities
(RF Law “On Protection of Consumer Rights”).
Consumer
Microeconomics in its analysis of the consumercomes from the assumption of rationality
behavior. Rational behavior of an individual
person or group of people is manifested in their
striving to achieve maximum utility from
consumption of this product subject to restrictions
budget.
Consumer behavior is a process
formation
demand
consumers
on
variety of goods and services based on their income and
personal preferences.
Consumer
According to the American economist Tibor deScitovsky, the main idea of economics is
that “the consumer himself knows what he needs, and
that the economic system works best
when it satisfies the desires of the consumer,
which are manifested in his behavior in the market.”
It is the decisions of individual consumers about
the acquisition of a particular product is formed in
ultimately market demand is determined in
combined with market supply level
equilibrium prices and the volume of real sales.
Consumer income
Consumer income is the amount of moneyreceived over a certain period of time and
intended for the purchase of goods and services for
personal consumption purposes.
Main sources of nominal (monetary)
consumer income:
Wage.
Social benefits (scholarships, pensions, benefits).
Income from business activities.
Income from property (rent, interest,
dividends, etc.).
Rational consumer behavior
Basic principles of consumer behaviormarket:
Buyer
guided by
their
preferences.
Consumer behavior is rational.
Consumer
strives
maximize
total utility.
When choosing goods, consumer options
limited by the prices of goods and his income.
Standard of living
Standard of living (level of well-being) –degree
satisfaction
material
And
spiritual needs of people with a mass of goods and
services used per unit of time.
Standard of living is based on volume
real income per capita and
corresponding volume of consumption.
The quality of life
The quality of life of the population is the degree of satisfactionmaterial, spiritual and social needs of a person.
The main indicators of the quality of life of the population are:
income of the population
food quality
home comfort
healthcare quality
quality of social services
the quality of education
environmental quality
demographic trends
safety
“Opportunity cost” - Offer a way out of the situation. Hierarchy of the theory of needs according to A. Maslow. Limited resources. Every person sacrifices something when making a decision. Every choice involves costs. Consequences of resource scarcity: Anything that people value as a means of satisfying needs. What are the two meanings of the word "economy"?
“Monopoly and competition” - Reasons for formation and main forms 3.2. Behavior of a company under monopoly conditions 3.3. Oligopoly. 10. 3.1. Monopoly. Psk. The point of intersection of the MR and MC curves is the firm's equilibrium point. R. Optimum point and profit of the monopolist. M.C.
“Costs and profits of the company” - Association of Entrepreneurs. Firm. Types of Firms. Concepts of a company and types of companies. Definitions. Economic conditions of the company's activities. Exercise No. 1. Calculation of accounting and economic profit (thousand rubles). General partnership – Limited partnership – Limited liability company – Joint stock company – Corporation – Holding – company -.
“Quantity of demand” - Point elasticity. Unit elasticity (Epd=1). Demand. Explain the reasons for your answer. The dependence of the quantity demanded on the price level is called the demand scale. The DD curve obtained on the graph (from the English demand - “demand”) is called the demand curve. Law of demand. Reasons for changes in demand. Factors influencing demand.
“Capital” - Topic 6. Capital market and interest. Capital creation: Rate of time preference = rK. Gross investment takes into account replacement costs (depreciation). Features of demand for investment. 30. Types of investments. The process of capital formation is sharply intensifying. 70. Net investment - gross investment minus funds used for reimbursement.
“Rational consumption” - 11. Herman Gossen. (Rational consumer) - a consumer who always maximizes utility. 5. Food. Indifference curve. Cloth. 9. 13. Rational consumer.
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