Managerial Economics in a

Global Economy, 5th Edition

by
Dominick Salvatore

Chapter 3: Appendix
Behind the Market Demand Curve
The Theory of Consumer Choice

Prepared by Robert F. Brooker, Ph.D. Copyright ©2004 by South-Western, a division of Thomson Learning. All rights reserved. Slide 1
 Indifference Curves

Prepared by Robert F. Brooker, Ph.D. Copyright ©2004 by South-Western, a division of Thomson Learning. All rights reserved. Slide 2
 The Budget Line
GF: M = $6, PX = PY = $1
GF’: PX = $2
GF’’: PX = $0.67

Prepared by Robert F. Brooker, Ph.D. Copyright ©2004 by South-Western, a division of Thomson Learning. All rights reserved. Slide 3
 Consumer Equilibrium

Prepared by Robert F. Brooker, Ph.D. Copyright ©2004 by South-Western, a division of Thomson Learning. All rights reserved. Slide 4
 Derivation of the
Consumer’s
Demand Curve

Prepared by Robert F. Brooker, Ph.D. Copyright ©2004 by South-Western, a division of Thomson Learning. All rights reserved. Slide 5
 Separation of the
Substitution and
Income Effect of
a Price Change

Prepared by Robert F. Brooker, Ph.D. Copyright ©2004 by South-Western, a division of Thomson Learning. All rights reserved. Slide 6