Economics Behind the Demand Curve

1. A consumer has preferences for two goods. Her preferences satisfy Axioms 1 through 4 as discussed in class. A v D v

The action that leads to the greatest net outcome of utility is then considered to be the correct choice. According to this theory, Alistair should choose the action that will maximise happiness and minimise unhappiness.

In a multitude of situations, an abundance of choice can benefit individuals. As preference and taste vary from person to person, choice is essential in order to satisfy

The principle of utility is essentially the balance between the principles of beneficence and non-maleficence. It is defined as acting a manner that produces the greatest benefit and the least harm to an individual (Munson, 2014). This principle is significant in healthcare because it can be applied by healthcare professionals to help weigh the benefits of test and treatments compared to the harm. For example, if a medical diagnosis suggests that treatment through surgery is the best option for a patient, but the physician believes that the patient is not a candidate for surgery due to the patient’s medical condition, the physician is practicing the principle of utility. Healthcare professionals must consider the harm and possible death (morbidity and mortality) of the patient before proceeding with diagnosis, surgery, and treatment (Munson, 2014).

It is a common misunderstanding that utility and pleasure are not the same. Utility is pleasure itself and takes into consideration the quality and quantity of pleasure from the actions taken. The happiness principle says that actions are right if they promote happiness, or pleasure, and wrong if they cause pain. Mill believes that some pleasures are more desirable than others due to the complexity of the human mind, making it harder for us to be happy, therefore making some states of happiness higher quality than others. Mill ultimately says that people with open minds will be happier due to different varieties of interest while people with narrow minds will have a harder time being happy. According to utility, we can’t enjoy pleasure without

In Chapter 2, Mill begins by answering the objection which claims that utility is a separate concept from pleasure and happiness. He discerns this as simply a lack of education on the objector’s part, because the concept of utility is defined as pleasure itself and the absence of pain. He assumes that this misconception arose from people hearing the word “utility” and simply inferring that it’s something cold and opposed to pleasure because of how it sounds. He then proceeds to dub utility as “the Greatest Happiness Principle,” which holds that “actions are right in proportion as they tend to promote happiness, wrong as they tend to produce the reverse of happiness. By happiness is intended pleasure, and the absence of pain; by unhappiness, pain, and the privation of pleasure.” According to this definition, pleasure and the absence of pain are the only things that are inherently “good.” Therefore,

“Richard Hare is one of most foremost contemporary defenders of utilitarianism today. He is committed to the principle of utility - to the act which does more good, gives greater benefit, or which satisfies more preferences, or the stronger of two or more preferences.” (Hare, 1981). This essay will discuss how the Philosopher, Richard Hare, derives preference utilitarianism from moral judgement aspects such as prescriptivity and universalizability using various different example(s) to explain and create understanding, and finally the essay will be concluded as to how Richard Hare derived preference utilitarianism.

On the other hand, we have Jeremy Bentham, a British philosopher and founder of Utilitarianism, asserting, “ Pain and pleasure… for them alone point out what we ought to do, as well as to determine what we shall do… the standard of right and wrong are fastened to their throne, [being] the principle of utility. The principle of utility is meant that property in any object, whereby it tends to produce benefit, advantage, pleasure, good, or happiness, or to prevent the happening of mischief, pain, evil, or unhappiness. [The object] is said to promote

Arrow’s impossibility theorem represents a fascinating problem in the philosophy of economics, widely discussed for insinuating doubt on commonly accepted beliefs towards collective decision making procedures.

* 2. the first glass of water has great utility for him. If he takes second glass of water after that, the utility willbe less than that of the first one. It is because the edge of his thirst has been blunted to a great extent. Ifhe drinks third glass of water, the utility of the third glass will be less than that of second and so on.The utility goes on diminishing with the consumption of every successive glass water till it drops down tozero. This is the point of satiety. It is the position of consumer’s equilibrium or maximum satisfaction. If theconsumer is forced further to take a glass of water, it leads to disutility causing total utility to decline. Themarginal utility will become negative. A rational consumer will stop taking water at the point at whichmarginal utility becomes negative even if the good is free. In short, the more we have of a thing, ceterisparibus, the less we want still more of that, or to be more precise.“In given span of time, the more of a specific product a consumer obtains, the less anxious he is to getmore units of that product” or we can say that as more units of a good are consumed, additional units willprovide less additional satisfaction than previous units. The following table and graph will make the law ofdiminishing marginal

Demand is a curve showing the various amounts of a product consumers want and can purchase at different prices during a specific period of time. Supply is a curve showing the different amounts of a product suppliers are willing to provide at different prices. Equilibrium price and quantity are determined by the intersection of demand and supply. Price elasticity of demand (PED) indicates the responsiveness of consumers to a change in price, and is reflected in the relative slope of demand. Production possibilities curves (PPC) show the maximum production of goods that can be produced by an economy. Given that all of the resources are being used fully and efficiently and the technology is fixed in the economy, shown in Figure 1 is a PPC curve of the market of cars and bicycles.

Overall happiness and utility is when the maximum amount of pleasure is given for the least amount of pain. However, utility is only beneficial to a majority of society and can cause several others to suffer IF it is offering the greatest pain to pleasure ratio. The utility of a community leaves a lot of room to argue that people can be put through an unreasonable amount of pain if it offers better utility for the community. Beccaria argues that punishment that is abused or unnecessary will be ineffective in a society. Therefore, he is challenging Bentham’s view on the utility of a community. Beccaria’s view on a society is that a social contract will keep the pain to pleasure ratio at a reasonable point, while also arguing that utility to individuals is just as important. Beccaria would not agree that utility is what justifies punishment. However, he would concur that by joining a society and agreeing to the social contract theory, then one is approving that punishment is justified.

Overall happiness and utility is when the most amount of pleasure is given for the least amount of pain. However, utility is only beneficial to a majority of society and can cause several others to suffer IF it is offering the best pain to pleasure ratio. Utility of a community leaves a lot of room to argue that people can be but through an unreasonable amount of pain if it offers better utility for the community. Beccaria argues that punishment that is abused or unnecessary will be ineffective in a society. Therefore, he is challenging Bentham’s view on the utility of a community. Beccaria’s view on a society is that a social contract will keep the pain to pleasure ratio at a reasonable point, while also arguing that utility to individuals is just as important. Beccaria would not agree that utility is what justifies punishment. However, he would agree that by joining a society and agreeing to the social contract theory then one is agreeing that punishment is justified.

Using This Volume 1 Introduction to Demand and Supply 1.1 Quiz . . . . . . . . . . . . . . . . . . 1.2 Group Exercise . . . . . . . . . . . . 1.3 Homework Questions . . . . . . . . . 1.4 Homework Solutions . . . . . . . . .

Uniqueness and price attained equal portions of preferences among subjects, and interest in Vertu was overall quite low (e.g. when asked if they were likely to consider Vertu as an alternative when aiming to purchase a mobile phone).