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Law of diminishing marginal utility - successive quantities of a good consumed will generate smaller amounts of extra utility.
MU can be measured by the price consumers are prepared to pay for a good. The optimum purchase rule states that to maximise total utility, consumers should purchase more of a good, up to where P=MU. Once P>MU it is not worth purchasing, as the price paid woule be higher than the satisfaction gained from consuming it.
The demond carve is derived from (or comes from ) the low of diminshing utility. The low of diminshing utility and optimum purchase rule explain the law of demand, and hence the downward-sloping demand cyrve.


1楼2012-02-24 07:37回复
    Non-price factors
    1.changes in income
    2.changes in consumers' tastes and preferences
    3.changes in the price of substitute goods
    4.changes in the price of complementary goods
    5.Consumers' expectations of the future
    6.Number of consumers in the population


    2楼2012-02-24 07:41
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      5楼2012-05-23 17:12
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        Monopolies characteristics:
        -only one firm in the market
        -monopoly: strong barriers
        -product has no close substitutes
        -is a price maker


        6楼2012-05-24 13:30
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          Why monopoly can make sp in longrun
          -strong barriers can stop other firms entering the market
          -monopoly is a price maker


          7楼2012-05-24 13:30
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            2 types of product differentation used by Garden City Mechanics
            -Location
            -Service


            8楼2012-05-24 14:08
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              what market stricture does Garden City Mechanics belongs to?
              Monopolistic competition


              9楼2012-05-24 14:09
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                3 characteristicics of monopolistic competition
                -many small firm
                -imperfect type of competition
                -differentiated type of producer
                -weak barriers to entry
                -weak contorl over price
                -weak contorl over quantity sold
                -斜线
                -例子:retail shops: clothes stores and restaurants


                10楼2012-05-24 14:16
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                  DWL is the loss of efficiency that is not a gain for produce and consumer


                  11楼2012-05-24 14:34
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                    supernormal profit: where total revenue is greater than total economic cost. this is a leval of profit above what is necessary to keep a firm in the industry, it will attract other firms into industry to take advantage of the high level of profit in the long run.


                    12楼2012-05-24 15:42
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                      SPrule
                      -output:MR=MC ----max
                      -compare AR and AC ---profit


                      13楼2012-05-24 15:43
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                        SP从下到上:
                        MR;AR=D;AC.MC=S


                        14楼2012-05-24 15:45
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                          subsidy


                          18楼2012-05-24 16:00
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                            product differentiation: attacting customers by making a product apper different and superior to the competition's product.
                            include:
                            -location
                            -packaging
                            -service
                            -sponsorship
                            -competitions
                            -branding and logos
                            -advertising


                            19楼2012-05-24 16:13
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                              Perfect competition : many small firm . none barriers to entry


                              来自手机贴吧20楼2012-05-25 08:50
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