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Icioeconomic Analysis : The Concept Of Seginal Benefits

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My group broke down our project into different parts, and we would find different resources for each section. First, we wanted to a general idea about the concept of decreasing marginal benefit by consulting the textbook and online resources released by Dan Ariely and Alain Samson. After we found out that the concept of decreasing marginal benefit was a result of less utility/satisfaction from consuming subsequent units, we created a graph that would help depict this change with its relation to price. We hoped this would help the audience understand the connection between decreased willingness to pay for a product was indictive of decreased utility. My group and I wanted to give the audience a complete rundown of the definition and reasons …show more content…

Two sections of our presentation that I feel were effective were the explanation that drug addiction violated the idea of decreasing marginal benefit and the inclusion of Giffen goods into our project. We showed how people usually strived to make rational decisions that would shape economic assumptions. Most assume people to generally to tire of the consumption of the same product after some time. However, we were able to show statistics (145% increase in heroin usage) in the last 10 years that users aren’t readily giving up drugs. We also show that a rational person would buy less quantities of a product after a massive price spike for a product with a relatively inelastic demand. In contrast to a rational person, an irrational person would buy more of a product with an inelastic demand despite a massive price increase. We looked at specific journals looking addictive behavior to and the impact inferior drugs have on poor users. Another section of our presentation that I felt was effective was the inclusion of the concept of Giffen goods into our presentation. We explained the myriad of reasons as to why Giffen goods did not always follow the rule of decreasing marginal demand. We stated that, like illicit drugs, individuals’ demand for giffen goods increases with price, and we explained that the income effect and substitution effect working in tandem helped to show the similarities. Graphically, the

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