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Chapter 10 The Rational Consumer
Econ 101: Principles of Microeconomics
Ch. 10: The Rational Consumer

Fall 2010

Herriges (ISU)

Chapter 10: The Rational Consumer

Fall 2010

1 / 28

Outline

1

Utility: Getting Satisfaction

2

Budgets and Optimal Consumption

3

The Optimal Consumption Choice

4

Spending the Marginal Dollar

5

From Utility to the Demand Curve

Herriges (ISU)

Chapter 10: The Rational Consumer

Fall 2010

2 / 28

The Rational Consumer
One of the key assumptions underlying economics is the concept of the rational consumer

Herriges (ISU)

Chapter 10: The Rational Consumer

Fall 2010

3 / 28

The Rational Consumer
One of the key assumptions underlying economics is the concept of the rational consumer ; i.e., that individuals know what they want and seek to make the most of the available opportunities given the scarcity constraints they face.

Herriges (ISU)

Chapter 10: The Rational Consumer

Fall 2010

3 / 28

The Rational Consumer
One of the key assumptions underlying economics is the concept of the rational consumer ; i.e., that individuals know what they want and seek to make the most of the available opportunities given the scarcity constraints they face.
Notice that there are two key components here:

Herriges (ISU)

Chapter 10: The Rational Consumer

Fall 2010

3 / 28

The Rational Consumer
One of the key assumptions underlying economics is the concept of the rational consumer ; i.e., that individuals know what they want and seek to make the most of the available opportunities given the scarcity constraints they face.
Notice that there are two key components here:
1

The notion that individuals have preferences: This defines what they want to consume.

Herriges (ISU)

Chapter 10: The Rational Consumer

Fall 2010

3 / 28

The Rational Consumer
One of the key assumptions underlying economics is the concept of the rational consumer ; i.e., that individuals know what they want and seek to make the most of the available opportunities given the scarcity constraints they
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