Consumer Equilibrium

The consumer equilibrium is achieved when:

MU_X/P_X = MU_Y/P_Y

 Q_{X *}P_X + Q_{Y *} P_Y= Y

When:

MU_X: marginal utility for (x) good.

MU_Y: marginal utility for (y) good.

P_{X: (x) price}

P_{Y:  (y) price}

Q_X: (x) quantity

Q_{Y: (y) quantity}

Y: income

Example:

When p_x = 5000 and p_y = 10000 and y = 45000 ID find consumer equilibrium?

 MU_X/P_X=MU_Y/P_Y

 Q_X*P_X+Q_Y*P_Y=Y

Questions:

1.   Give the consumer surplus definition?

2.   What is The consumer surplus uses?

3.   Draw graphic explain consumer surplus?

4.   Writ the equation of Estimates the change in consumer surplus?

5.   When p_x = 3 and p_y = 5 and y = 32 ID find consumer equilibrium as table below?

6.   Translate the following paragraph:-

Consumer Industries

Consumer industries companies are manufacture goods that affect nearly every part of our daily lives—everything from clothing and shoes to home uses and cell phones. These products are routed through sell channels to reach the end consumer. Consumer industries consists of several different business parts, including consumer packaged goods; consumer electronics and durables; soft goods; and telecommunications service suppliers. Each business part within consumer industries is faced with similar yet distinct business challenges. There are similarities in the consumers that purchase these products, and these parts require a similar set of strategies to address them such as product innovation, fashion, and pricing strategies, as well as product and service packages. Differences arise from the way in which the completing of these strategies ties to the channel, competition, execution, and completion.

6-1. Definition: It is an economic process that uses resources to create a commodity that is suitable for use by consumers.

       This process can include manufacturing, storing, shipping, and packaging.

       Because it is a flow concept, production is measured as a “rate of output per period of time”.

6-2. Factors of production: Factors of production are the resources used in the production of goods and services in economics. There are four  factors of production:

·        Land or natural resources, the payment for land is rent.

·        Labor – human effort used in production, the payment for labor is a wage.

·        Capital the payment for capital is called interest.

·        entrepreneurs the payment for entrepreneurs called profit.

6-3.Production Function

There are several ways of specifying the production function.

In a general mathematical form, a production function can be expressed as:

Q = f(X₁,X₂,X₃,...,X_n)

where:

Q = quantity of output

X₁,X₂,X₃,...,X_n=factor inputs (such as capital, labour, land or raw materials).

One formulation is as a linear function:

Q = a + bX₁ + cX₂ + dX₃,...

where a,b,c,and d are parameters that are determined empirically.

Another is as a Cobb-Douglasproduction function (multiplicative):

 Q=aX^b₁ X^c₂

6-4.The production function as a graph

Any of these equations can be designed on a graph. A typical production function is shown in the following diagram.