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Consumer's preferences, utility, and demand

The sections in the text on preferences, utility, and demand are included so that students will develop a clearer understanding of the motivation for the use of value schedules for buyers in a market. The connection between the unit values used in experiments and the commonly used demand functions is carefully worked out near the beginning of the notes in Section 2.1. Later, Section 4 provides a fuller description of how demand functions are determined based on utility functions. The notes include graphical representation of indifference curves from commonly used utility functions so that students can see the relationship between price and the quantity of each commodity that a consumer will choose. The sections also include the derived demand curve for each of these utility functions so that students can see the relationship between the graphically derived demand curve and the representation of demand as a demand function. The intent of this approach and the associated exercises is to help the student see the derivation of demand in several different ways in order to clarify the concept of demand derivation.

 
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