Book contents
- Frontmatter
- Contents
- Preface
- How to use this book
- List of online perspectives
- List of further readings online
- List of online video modules
- Book I The market economy, overview and application
- Book II Demand and production theory
- 6 Consumer choice and demand in traditional and network markets
- 7 Production costs and the theory of the firm
- 8 Production costs in the short run and long run
- Book III Competitive and monopoly market structures
- References
- Index
6 - Consumer choice and demand in traditional and network markets
from Book II - Demand and production theory
- Frontmatter
- Contents
- Preface
- How to use this book
- List of online perspectives
- List of further readings online
- List of online video modules
- Book I The market economy, overview and application
- Book II Demand and production theory
- 6 Consumer choice and demand in traditional and network markets
- 7 Production costs and the theory of the firm
- 8 Production costs in the short run and long run
- Book III Competitive and monopoly market structures
- References
- Index
Summary
It is not the province of economics to determine the value of life in “hedonic units” or any other units, but to work out, on the basis of the general principles of conduct and the fundamental facts of social situations, the laws which determine prices of commodities and the direction of the social economic process. It is therefore not quantities, not even intensities, of satisfaction with which we are concerned … or any other absolute magnitude whatever, but the purely relative judgment of comparative significance of alternatives open to choice.
Frank H. KnightPeople adjust to changes in some economic conditions with a reasonable degree of predictability. When department stores announce lower prices, customers will pour through the doors. The lower the prices go, the larger the crowd will be. When the price of gasoline goes up, drivers will make fewer and shorter trips. If the price stays up, drivers will buy smaller, more economical cars. Even the Defense Department will reduce its planned purchases of tanks and bombers when their prices rise.
Behavior that is not measured in dollars and cents is also predictable in some respects. Students who stray from the sidewalks to dirt paths on sunny days stick to concrete when the weather is damp. Professors who raise their course requirements and grading standards find their classes shrinking in size. Small children shy away from doing things for which they recently have been punished.
- Type
- Chapter
- Information
- Microeconomics for MBAsThe Economic Way of Thinking for Managers, pp. 211 - 244Publisher: Cambridge University PressPrint publication year: 2010