The Behavior of Consumers

Steven E. Landsburg

Chapter 3 in Price Theory and Applications, 2024, pp 53-100 from World Scientific Publishing Co. Pte. Ltd.

Abstract: A woman goes into a restaurant. What do you think she orders?Surely, you don’t have enough information to answer. In fact, you’re missing two different kinds of information. First, what does the woman like to eat? And second, what’s on the menu?A shopper goes into a grocery store. What do you think he buys?This one’s even harder, because the woman in the restaurant orders just one entree, whereas the man in the grocery store chooses a whole basket full of items. But the same kind of information is missing. First, what foods does he like? Second, what are his options?…

Keywords: Microeconomics; Price Theory; Supply and Demand; Demand Curve; Adverse Selection; Budget Line; Indifference Curve; Common Property; Competition; Competitive Industry; Constant-cost Industry; Consumer Surplus; Producer Surplus; Social Gain; Social Welfare; Efficiency Criterion; Economic Efficiency; Cost; Price; Deadweight Loss; Price Ceiling; Tariff; Rationing; Quotas; Equimarginal Principle; Price Discrimination; Monopoly; Two-part Pricing; Two-part Tariff; Fishery; Collusion; Income Effect; Substitution Effect; Normal Good; Inferior Good; Giffen Good; Externality; Property Right; Coase Theorem; Transactions Cost; Law of Demand; Marginal Cost; Marginal Revenue; Marginal Value; Market Failure; Moral Hazard; Nash Equilibrium; Normative Criterion; Positive Economics; Oligopoly; Hayek; Social Cost; Economics of Information; Sales Tax (search for similar items in EconPapers)
JEL-codes: D D04 D4 L11 (search for similar items in EconPapers)
Date: 2024
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