{"id":2817,"date":"2023-10-03T13:49:49","date_gmt":"2023-10-03T13:49:49","guid":{"rendered":"http:\/\/localhost\/ecole9ja\/?p=2817"},"modified":"2023-10-03T13:53:39","modified_gmt":"2023-10-03T13:53:39","slug":"week-3-ss2-first-term-economics-notes","status":"publish","type":"post","link":"https:\/\/ecolebooks.com\/nigeria\/posts\/week-3-ss2-first-term-economics-notes\/","title":{"rendered":"Week 3 &#8211; SS2 First Term Economics Notes"},"content":{"rendered":"<p><strong>WEEK THREE<br \/>\n<\/strong><strong>THEORY OF CONSUMER BEHAVIOUR<br \/>\n<\/strong><strong>CONTENT<br \/>\n<\/strong><\/p>\n<ul>\n<li>\n<div>Definition of Utility\n<\/div>\n<\/li>\n<li>\n<div>Cardinal school of thought\/Assumption\n<\/div>\n<\/li>\n<li>\n<div>Concept of Total, Average and Marginal Utility\n<\/div>\n<\/li>\n<li>\n<div>The law of Diminishing Marginal Utility.\n<\/div>\n<\/li>\n<\/ul>\n<p><strong>THEORY OF CONSUMER BEHAVIOUR<br \/>\n<\/strong>The theory of consumer behaviour is also known as the theory of household behaviour.  It is primarily concerned with how the consumer or household tries to satisfy his\/her wants by dividing his\/her limited amount of income between the various commodities that give him equal amount of satisfaction.<\/p>\n<p>\u00a0<strong>WHAT IS UTILITY?<br \/>\n<\/strong>Utility can be defined as the satisfaction derived from the consumption of a given commodity.  Hence, when a consumer derives satisfaction from the consumption of a commodity, it can be said that the commodity or service possesses utility.<br \/>\nUtility therefore, is relative to a consumer, depending on the time, place, form, etc.<br \/>\nA commodity that can satisfy a consumer&#8217;s want at a particular point in time and place may not satisfy another&#8217;s want.<\/p>\n<p>\u00a0<strong>EVALUATION<br \/>\n<\/strong><\/p>\n<ol>\n<li>\n<div>Define utility.\n<\/div>\n<\/li>\n<li>\n<div>What is consumer behaviour?\n<\/div>\n<\/li>\n<\/ol>\n<p>\u00a0<strong>There are basically two schools of thought in the analysis of utility and they are as follows:<br \/>\n<\/strong>1.\u00a0\u00a0\u00a0\u00a0Cardinal school of thought<br \/>\n2.\u00a0\u00a0\u00a0\u00a0Ordinal school of thought.<\/p>\n<p>\u00a0<strong>CARDINAL SCHOOL OF THOUGHT:<\/strong> This approach emphasizes that utility is measurable.  That is, after consuming a given quantity of a commodity the consumer can simply evaluate his satisfaction through the use of figures which range from zero to infinity.<\/p>\n<p>\u00a0<strong>ASSUMPTIONS OF CARDINAL APPROACH<br \/>\n<\/strong>i.\u00a0\u00a0\u00a0\u00a0Utility is measurable<br \/>\nii.\u00a0\u00a0\u00a0\u00a0The consumer is rational<br \/>\niii.\u00a0\u00a0\u00a0\u00a0There is diminishing marginal utility<br \/>\niv.\u00a0\u00a0\u00a0\u00a0Total utility (TU) depends on the quantity consumed.<br \/>\nv.\u00a0\u00a0\u00a0\u00a0Money income of the consumer is held constant<\/p>\n<p>\u00a0<strong>CONCEPT OF TOTAL, AVERAGE AND MARGINAL UTILITY<br \/>\n<\/strong><strong>TOTAL UTILITY: <\/strong>This is the total amount of satisfaction a consumer derives from the consumption of a particular commodity at a point in time.  Consumers&#8217; utility increases as the quantity consumed increases but not at equal rate because consumer has a saturation point in the consumption of particular commodity at a given time.<br \/>\n<img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1349_Week3SS2Fi1.png\" alt=\"\"\/><img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1349_Week3SS2Fi2.png\" alt=\"\"\/><img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1349_Week3SS2Fi3.png\" alt=\"\"\/><img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1349_Week3SS2Fi4.png\" alt=\"\"\/>                           \u00a0y<br \/>\n<img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1349_Week3SS2Fi5.png\" alt=\"\"\/>   Units of<br \/>\n    Utility<br \/>\n                                                              \u00a0TU<br \/>\n\u00a0<br \/>\n\u00a0\u00a0<br \/>\n\u00a0\u00a0<br \/>\n\u00a0<strong>X<br \/>\n<\/strong><strong>                                  Qty of goods<br \/>\n<\/strong><strong>AVERAGE UTILITY:<\/strong> This derived by dividing total utility by the units of the commodity consumed.  That is, it is the satisfaction which a consumer derives per unit of a commodity consumed.      AU = TU\/Q<br \/>\n                                        y<br \/>\n<img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1349_Week3SS2Fi6.png\" alt=\"\"\/>Utility<br \/>\n<img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1349_Week3SS2Fi7.png\" alt=\"\"\/><\/p>\n<p>\u00a0<br \/>\n\u00a0\u00a0\u00a0\u00a0\u00a0<br \/>\n\u00a0\u00a0\u00a0\u00a0\u00a0<br \/>\n<img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1349_Week3SS2Fi8.png\" alt=\"\"\/>\u00a0\u00a0\u00a0\u00a0                             AU<br \/>\n<strong>                                                                                        x<\/strong><br \/>\n\t\t<strong>                                                                Qty<br \/>\n<\/strong><br \/>\n\u00a0<strong>MARGINAL UTILITY:<\/strong> This means the additional satisfaction a consumer derives from the consumption of additional unit of a particular commodity.  It is then the change in the total utility as a result of the consumption of additional unit of a commodity.   MU  = \u2206TU\/\u2206Q<\/p>\n<p>\u00a0                             y<br \/>\n<img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1349_Week3SS2Fi9.png\" alt=\"\"\/><img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1349_Week3SS2Fi10.png\" alt=\"\"\/>Utility<\/p>\n<p>\u00a0<br \/>\n\u00a0<br \/>\n\u00a0<br \/>\n\u00a0<img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1349_Week3SS2Fi11.png\" alt=\"\"\/>\u00a0\u00a0\u00a0\u00a0                            \u00a0\u00a0\u00a0\u00a0<br \/>\n<strong>                                                                            x<br \/>\n<\/strong><strong>                                                 Qty<br \/>\n<\/strong><strong>                                                                 MU<br \/>\n<\/strong><strong>UTILITY  SCHEDULE<br \/>\n<\/strong><\/p>\n<div>\n<table>\n<tbody>\n<tr>\n<td><strong>Quantity of Goods consumed<\/strong>\u00a0<\/td>\n<td><strong>Total Utility<\/strong><\/td>\n<td><strong>Average Utility<\/strong>\u00a0<\/td>\n<td><strong>Marginal Utility<\/strong>\u00a0<\/td>\n<\/tr>\n<tr>\n<td>1\u00a0<\/td>\n<td>4\u00a0<\/td>\n<td>4\u00a0<\/td>\n<td>&#8211;\u00a0<\/td>\n<\/tr>\n<tr>\n<td>2\u00a0<\/td>\n<td>7\u00a0<\/td>\n<td>3.5\u00a0<\/td>\n<td>3\u00a0<\/td>\n<\/tr>\n<tr>\n<td>3\u00a0<\/td>\n<td>9\u00a0<\/td>\n<td>3\u00a0<\/td>\n<td>2\u00a0<\/td>\n<\/tr>\n<tr>\n<td>4\u00a0<\/td>\n<td>10\u00a0<\/td>\n<td>2.5\u00a0<\/td>\n<td>1\u00a0<\/td>\n<\/tr>\n<tr>\n<td>5\u00a0<\/td>\n<td>10\u00a0<\/td>\n<td>2.0\u00a0<\/td>\n<td>0\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>\u00a0<strong>RELATIONSHIP BETWEEN TOTAL UTILITY AND MARGINAL UTILITY<br \/>\n<\/strong><\/p>\n<ol>\n<li>\n<div>The MU begins to fall right after the first unit of the commodity has been consumed and continues to diminish until it reaches zero level on x \u2013 axis and below.\n<\/div>\n<\/li>\n<li>\n<div>At the point where the MU reaches zero level on the x \u2013 axis, TU reaches its maximum point.\n<\/div>\n<\/li>\n<li>\n<div>When the MU cuts the x \u2013 axis, TU begins to fall from its peak.\n<\/div>\n<\/li>\n<li>\n<div>When the MU descends below the x \u2013 axis and becomes negative, the TU curve begins to slope downward\n<\/div>\n<\/li>\n<\/ol>\n<p><strong>TOTAL AND MARGINAL UTILITY CURVES<br \/>\n<\/strong><img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1349_Week3SS2Fi12.png\" alt=\"\"\/>Utility   y<br \/>\n<img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1349_Week3SS2Fi13.png\" alt=\"\"\/><\/p>\n<p>\u00a0<img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1349_Week3SS2Fi14.png\" alt=\"\"\/><strong>\u00a0\u00a0\u00a0\u00a0<\/strong><br \/>\n\t\t<strong>                                                                     TU<br \/>\n<\/strong><br \/>\n\u00a0<br \/>\n\u00a0<strong>\u00a0\u00a0\u00a0\u00a0<\/strong>\u00a0\u00a0\u00a0\u00a0<br \/>\n<img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1349_Week3SS2Fi15.png\" alt=\"\"\/><strong>                                                        MU\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0x<br \/>\n<\/strong><strong>                                                 Qty\u00a0\u00a0\u00a0\u00a0<br \/>\n<\/strong><strong>EVALUATION\u00a0\u00a0\u00a0\u00a0<br \/>\n<\/strong>1 Calculate the missing value from the table below.<\/p>\n<div>\n<table>\n<tbody>\n<tr>\n<td>Quantity of goods consumed\u00a0<\/td>\n<td>Total utility\u00a0<\/td>\n<td>Marginal utility\u00a0<\/td>\n<\/tr>\n<tr>\n<td>1\u00a0<\/td>\n<td>10\u00a0<\/td>\n<td>&#8211;\u00a0<\/td>\n<\/tr>\n<tr>\n<td>2\u00a0<\/td>\n<td>16\u00a0<\/td>\n<td>A\u00a0<\/td>\n<\/tr>\n<tr>\n<td>3\u00a0<\/td>\n<td>B\u00a0<\/td>\n<td>4\u00a0<\/td>\n<\/tr>\n<tr>\n<td>4\u00a0<\/td>\n<td>20\u00a0<\/td>\n<td>C\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>\u00a0<strong>THE LAW OF DIMINISHING MARGINAL UTILITY<br \/>\n<\/strong>The law of diminishing marginal utility states that, other things being equal, the marginal utility of a commodity to an individual decreases with extra unit of that commodity he consumes.  In other words, the law states that if a consumer goes on consuming successive equal increments in the quantity of a commodity, then the increase in total utility resulting will become smaller and smaller, that is, satisfaction per extra unit will start falling.  For instance, a beer drinker may derive maximum satisfaction in the first three bottles, after which decrease in satisfaction may set in as more and more bottles of beer are consumed until he may be unable to consume anymore.<\/p>\n<p>\u00a0<strong>UTILITY MAXIMIZATION<br \/>\n<\/strong>Utility maximization is also known as equilibrium of the consumer.  A point where a consumer derives maximum satisfaction when his marginal utility equates the price of the commodity consumed.  That is, the additional utility derived from the consumption of additional commodity is equal to price of the commodity.<br \/>\nIn the case of one commodity, a consumer will maximize his satisfaction in the consumption of a particular commodity when the MU of that commodity equals the price of that commodity, eg  MUx = Px<\/p>\n<p>\u00a0In the case of two or more commodities, a consumer is said to be in equilibrium or maximizes his utility when the ratio of MU of the last unit of the commodities consumed should be equal to the ratio of the price.  Alternatively, a consumer&#8217;s utility is maximized when the MU per amount spent on a product is equal to the MU per amount spent on any other product, as stated below:<br \/>\nMUx<br \/>\n\t\t\tMUy<br \/>\n\t\t\tMUz<br \/>\n\t\tPx          =        Py     =        Pz.\u00a0\u00a0\u00a0\u00a0<br \/>\nwhere MUx = MU of commodity X                                     \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<br \/>\n            Px    = Price of commodity X<br \/>\n            MU<sub>y<\/sub> = MU of commodity  Y<br \/>\n            Py     = Price of commodity Y<br \/>\n            MUz = MU  of commodity  Z<br \/>\n            Pz     = Price of commodity Z<\/p>\n<p>\u00a0<strong>CONSUMER SURPLUS<br \/>\n<\/strong>Consumer surplus is define as the difference between the amount a consumer budgeted to pay for a commodity based on the anticipated level of satisfaction, and the amount he actually paid to have it.  When he consumed the first unit, he was willing to pay as much as #50, but the commodity&#8217;s price was #30.  Thus, he saved #20.Therefore any amount above the market price of #30 represents the consumer&#8217;s surplus.<strong>\u00a0<\/strong><br \/>\n\t\t<img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1349_Week3SS2Fi16.png\" alt=\"\"\/><img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1349_Week3SS2Fi17.png\" alt=\"\"\/><img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1349_Week3SS2Fi18.png\" alt=\"\"\/><img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1349_Week3SS2Fi19.png\" alt=\"\"\/><img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1349_Week3SS2Fi20.png\" alt=\"\"\/><img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1349_Week3SS2Fi21.png\" alt=\"\"\/><img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1349_Week3SS2Fi22.png\" alt=\"\"\/><img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1349_Week3SS2Fi23.png\" alt=\"\"\/><img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1349_Week3SS2Fi24.png\" alt=\"\"\/><strong>\u00a0<br \/>\n<\/strong>\u00a0<br \/>\n\u00a0\u00a0<br \/>\n\u00a0\u00a0<br \/>\n\u00a0\u00a0<br \/>\n\u00a0<br \/>\n\u00a0\u00a0<br \/>\n\u00a0\u00a0<br \/>\n\u00a0\u00a0<br \/>\n\u00a0\u00a0<br \/>\n\u00a0<strong>EVALUATION<br \/>\n<\/strong><\/p>\n<ol>\n<li>Define consumer surplus.\n<\/li>\n<li> State the law of diminishing marginal utility.\n<\/li>\n<\/ol>\n<p>       3.         Use the tale below to answer the following questions:<\/p>\n<p>\u00a0  PLATE OF RICE CONSUMED\u00a0\u00a0\u00a0\u00a0                           TU                                              MU<br \/>\n\u00a0\u00a0\u00a0\u00a00\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0    0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0                             0<br \/>\n\u00a0\u00a0\u00a0\u00a01\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0100\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0            100<br \/>\n\u00a0\u00a0\u00a0\u00a02\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0160\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 ?<br \/>\n\u00a0\u00a0\u00a0\u00a03\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 ?\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a040<br \/>\n\u00a0\u00a0\u00a0\u00a04\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 ?\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a010<br \/>\n\u00a0\u00a0\u00a0\u00a05\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0230\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 ?<br \/>\n\u00a0\u00a0\u00a0\u00a06\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0230\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 ?<br \/>\n\u00a0\u00a0\u00a0\u00a07\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0200\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 ?<\/p>\n<p>\u00a03(a).\u00a0\u00a0\u00a0\u00a0Complete the above utility schedule<br \/>\n  (b).\u00a0\u00a0\u00a0\u00a0Draw the MU curve<br \/>\n  (c)i\u00a0\u00a0\u00a0\u00a0At what quantity does MU equal TU?<br \/>\n      ii\u00a0\u00a0\u00a0\u00a0What happens to the values of TU as quantity consumed increases?<br \/>\n     iii\u00a0\u00a0\u00a0\u00a0What is the value of MU when TU is maximized?<br \/>\n     Iv     What happens to MU as the quantity consume increases?<\/p>\n<p>\u00a0<strong>READING ASSIGNMENT<br \/>\n<\/strong><\/p>\n<ol>\n<li>\n<div>Fundamental Principles of Economics for SS by S. A. Akande, J. A. Azike Pages 86 \u2013 95.\n<\/div>\n<\/li>\n<li>\n<div>  Amplified and Simplified Economics for SSS by Femi Alonge page 29-30.\n<\/div>\n<\/li>\n<\/ol>\n<p>\u00a0<strong>GENERAL EVALUATION QUESTIONS<br \/>\n<\/strong><\/p>\n<ol>\n<li>\n<div>Why is scarcity a fundamental problem?\n<\/div>\n<\/li>\n<li>\n<div>Define labour.\n<\/div>\n<\/li>\n<li>\n<div>Differentiate between implicit cost and explicit cost.\n<\/div>\n<\/li>\n<li>\n<div>What is mobility of labour?\n<\/div>\n<\/li>\n<li>\n<div>List four advantages of the mean\n<\/div>\n<\/li>\n<\/ol>\n<p>\u00a0<strong>WEEKEND ASSIGNMENT<br \/>\n<\/strong>1.\u00a0\u00a0\u00a0\u00a0Which one of these assumptions do economists always make about consumers?<br \/>\n(a) That they are all wage earners (b) That they make rational decisions in the market (c) That they cannot spend more than their incomes (d) That they can measure utility derived from consumption<br \/>\n2.\u00a0\u00a0\u00a0\u00a0The aim of the consumer in allocating his income is (a) to maximize his marginal utility (b) to buy goods he wants most whatever the price. (c) to maximize his total utility (d) to buy those goods which fallen in price.<br \/>\n3.\u00a0\u00a0\u00a0\u00a0&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;takes place when the ratio MU of a commodity consumed is equal to the ratio of its price (a) consumer surplus (b) law of diminishing marginal utility (c) consumer behaviour (d) utility maximization<br \/>\n4.\u00a0\u00a0\u00a0\u00a0Total utility (TU) attains its peak when the Marginal utility (MU) is &#8230;.. (a) zero on x- axis (b)  above x- axis (c) close to x \u2013 axis (d) under x- axis<br \/>\n5.\u00a0\u00a0\u00a0\u00a0The difference between the amount of money a consumer planned to pay for a commodity and the actual amount of money he paid is&#8230;&#8230;&#8230;. (a) commodity price (b) consumer surplus (c) marginal cost (d) producer surplus <\/p>\n<p>\u00a0<strong>THEORY<br \/>\n<\/strong>1.\u00a0\u00a0\u00a0\u00a0With the use of table, explain the concept of diminishing marginal utility<br \/>\n2.\u00a0\u00a0\u00a0\u00a0Explain how utility is maximized <\/p>\n<p>\u00a0<br \/>\n\t\t\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"<p>WEEK THREE THEORY OF CONSUMER BEHAVIOUR CONTENT Definition of Utility Cardinal school of thought\/Assumption Concept&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,229],"tags":[],"class_list":["post-2817","post","type-post","status-publish","format-standard","hentry","category-posts","category-first-term-ss2-economics"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts\/2817","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/comments?post=2817"}],"version-history":[{"count":1,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts\/2817\/revisions"}],"predecessor-version":[{"id":2818,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts\/2817\/revisions\/2818"}],"wp:attachment":[{"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/media?parent=2817"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/categories?post=2817"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/tags?post=2817"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}