ECO 365 Week 5 participation Principles of Microeconomics, Ch. 21: The Theory of Consumer Choice

Read Ch. 21 of Principles of Microeconomics:

• 21-1 The Budget Constraint: What the Consumer Can Afford, pp. 436-437
• 21-2 Preferences: What the Consumer Wants, pp. 437-441
• 21-3 Optimization: What the Consumer Chooses, pp. 442-449
• 21-4 Three Applications, pp. 449-456
• 21-5 Conclusion: Do People Really Think This Way?, pp. 456-457

Consider the following as you read:

1. The theory of consumer choice.
2. Consider the term the Ten Principles of Economics and how it’s applied to the consumer buying trends.
3. Consider the theory of consumer choice and how it consumers facing trade-offs make decisions and how they respond to changes in their environment.
4. Consider for thought the following questions:

   • Do all demand curves slope downward?
   • How do wages affect labor supply?
   • How do interest rates affect household savings?