Week 5 Managerial Economics Notes
Week 5 Managerial Economics Notes 28-1112-05
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This 2 page Class Notes was uploaded by Jessica Notetaker on Thursday February 25, 2016. The Class Notes belongs to 28-1112-05 at Columbia College Chicago taught by David Sikich in Winter 2016. Since its upload, it has received 44 views. For similar materials see Managerial Economics in Entrepreneurship at Columbia College Chicago.
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Date Created: 02/25/16
Managerial Economics Week 5 Notes Factors that create demand: Common Example: Attending a concert *Weather *Price *Time(day&Date) *Location *Headline *Weather *Competition *Quality *Security ● Americans on average spend $35000 annually (ALL things you spent money on) ● #1 Spending=Housing (34%) ● #2 Spending=Transportation (17%) ● #3 Spending=Food SocioPsychiatric Explanations: We tell ourself it is okay to make purchases because of: Self Esteem, Ego, Self GRatification Keeping up with latest trends to fit in (reward yourself) Will be on Quiz Market Demand: Total quantity of how many people spend their money on specific items (ACTUAL Purchases) Consumer Demand: Potential People who will show interest (WANT to purchase) UtilitATISFACTION EX. First serving of all you can eat buffet ill be on Quiz Marginal Utilityclose to a second round, still satisfied and profitable EX. Going up for main dish of meal Total UtilitFinal stage of contentment and satisfaction Ex. Getting final plate of dessert Negative UtilityInto the negative stages of having too much Ex. Eating a second round of dessert and feeling sick 3 Steps ● Aware of product (Market Demand) ● DesireWant to See (consumer demand) ● Pay to See (Market Demand) Price ElasticityRESPONSIVENESS of wants EX. Candy bars are $1 so demand will be high. If raised to $4 demand and purchases will be low Price InelasticitNo impact on demand after price change Ex. Gas is at $2.00 and people are happy. Gas raises to $3.50 and people are not happy BUT still buy it since it is necessary to drive Substitute Goods: CHOICES Ex. Price raises at starbucks so you go to dunkin donuts Complementary Goods: When a price change affects two aspects in opposite ways Ex. Gas prices increase so SUV sales decrease due to high gas consumption
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