Firm Level Economics: Consumer and Producer Behavior

Start Date: 07/05/2020

Course Type: Common Course

Course Link:

About Course

All goods and services are subject to scarcity at some level. Scarcity means that society must develop some allocation mechanism – rules to determine who gets what. Over recorded history, these allocation rules were usually command based – the king or the emperor would decide. In contemporary times, most countries have turned to market based allocation systems. In markets, prices act as rationing devices, encouraging or discouraging production and encouraging or discouraging consumption in such a way as to find an equilibrium allocation of resources. We will construct demand curves to capture consumer behavior and supply curves to capture producer behavior. The resulting equilibrium price “rations” the scarce commodity. Markets are frequent targets of government intervention. This intervention can be direct control of prices or it could be indirect price pressure through the imposition of taxes or subsidies. Both forms of intervention are impacted by elasticity of demand. After this course, you will be able to: • Describe consumer behavior as captured by the demand curve. • Describe producer behavior as captured by the supply curve. • Explain equilibrium in a market. • Explain the impact of taxes and price controls on market equilibrium. • Explain elasticity of demand. • Describe cost theory and how firms optimize given the constraints of their own costs and an exogenously given price. This course is part of the iMBA offered by the University of Illinois, a flexible, fully-accredited online MBA at an incredibly competitive price. For more information, please see the Resource page in this course and

Course Syllabus

The fundamental problem of scarcity challenges us to think about an allocation mechanism to determine what is produced and who consumes it. We will discuss scarcity and allocation mechanisms. In this course, we will focus on markets and prices as the solution to this resource allocation problem.

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Course Introduction

Firm Level Economics: Consumer and Producer Behavior This course is the last in a series on the fundamentals of economic theory and supply and demand. In this course you will focus on the details of consumer and producer behavior, including the theory behind consumer behavior and producer behavior. We will also discuss the economy as a whole, including the macroeconomic and microeconomic elements. We will end the course with an emphasis on the key questions about the macroeconomy that you will need to ask yourself as you watch the videos and read the resources. In this course we will cover some of the most important topics in market efficiency theory: consumers and producers. We will start by looking at the labor market and how prices and wages work together to create value in the economy. We will look at the different types of contracts and bargaining positions that consumers may take and what those positions imply. We will explore the dynamic between consumers and producers and their interactions. We will focus on the elements of the price structure that create an attractive package for producers and create a sticky equilibrium in which producers can maximize their profits. We will look at the interplay between consumers and producers in the marketplace and in the economy as a whole and in the particular macroeconomic conditions that are characterized by consumer-producer relationships. We will also discuss the different dimensions of the demand curve, including the different price signals that consumers may send to producers and the tradeoff between spending more and saving more. After this course, you will be able to: 1. Describe the elements

Course Tag

Economics Consumer Behaviour Supply And Demand Cost

Related Wiki Topic

Article Example
Consumer economics Consumer economics is a branch of economics. It is a broad field, principally concerned with microeconomic analysis behavior in units of consumers, families, or individuals (in contrast to traditional economics, which primarily government or business units). It sometimes also encompasses family financial planning and policy analysis. The term largely describes what was more commonly called "home economics" in the past.
Consumer economics Consumer economics concludes the family-unit economists were strongly influenced by the most recent "consumer era"; which was the "Modern Consumer Movement" of the 1970s. The connection between Consumer Economics and consumer-related politics has been overt, although the strength of the connection varies between Universities and individuals.
List of important publications in economics "Economics and Consumer Behavior", Deaton & Muellbauer, Cambridge.
Information communication telecommunication economics Telecommunication, is the exchange of information, voice or data, per time per space by electronic means. Then economics of Telecommunication is also the economics of Information Communication & Telecommuniactio refers to the branch of economics that APPLIES the principles of economics vis-a-vis demand, supply, market structures, consumer and producer behavior to the study and propound applicable theories to ICT markets and industry.
Consumer economics Many facets of Consumer economics are measured regularly by the Federal Reserve System and the Bureau of Economic Analysis and are available for the public. A number of indicators are published regularly from these and other academic sources, such as personal income, total household debt, and the Consumer Leverage Ratio.
Producerconsumer problem In computing, the producerconsumer problem (also known as the bounded-buffer problem) is a classic example of a multi-process synchronization problem. The problem describes two processes, the producer and the consumer, who share a common, fixed-size buffer used as a queue. The producer's job is to generate data, put it into the buffer, and start again. At the same time, the consumer is consuming the data (i.e., removing it from the buffer), one piece at a time. The problem is to make sure that the producer won't try to add data into the buffer if it's full and that the consumer won't try to remove data from an empty buffer.
Aggregate behavior In different schools of thought of economics, aggregate behavior may play a part in the entire process in determining the aggregate demand of the economy and in others it may not. In the neoclassical theory of economics, individual consumer behavior will not have any effect on the aggregate demand. This is due to the fact that even though consumers have different tastes and incomes, consumers will still purchase the goods and services to their own interest, thus ensuring that the resources are continuously flowing in the market. In the Keynesian theory of economics, it is argued that both public and individual behavior will have an effect on aggregate demand due to the expenditure.
Agricultural economics While at one time, the field of agricultural economics was focused primarily on farm-level issues, in recent years agricultural economists have studied diverse topics related to the economics of food consumption. In addition to economists' long-standing emphasis on the effects of prices and incomes, researchers in this field have studied how information and quality attributes influence consumer behavior. Agricultural economists have contributed to understanding how households make choices between purchasing food or preparing it at home, how food prices are determined, definitions of poverty thresholds, how consumers respond to price and income changes in a consistent way, and survey and experimental tools for understanding consumer preferences.
Producerconsumer problem The producerconsumer problem, particularly in the case of a single producer and single consumer, strongly relates to implementing a FIFO or a channel. The producerconsumer pattern can provide highly efficient data communication without relying on semaphores, mutexes, or monitors "for data transfer". Use of those primitives can give performance issues as they are expensive to implement. Channels and FIFOs are popular just because they avoid the need for end-to-end atomic synchronization. A basic example coded in C is shown below. Note that:
Psychophysiological economics Psychophysiological economics is a field of study focused on the assessment and evaluation of psychological and physiological events as factors shaping consumer economic behavior. Psychophysiological economists believe that behavior and cognitive processing are indivisible and that behavioral, cognitive, and physiological tools and techniques can be combined to create interventions that improve the economic well-being of consumers.
Consumer economics The traditional economists had little interest in analyzing family units. When economic theory was insufficient to explain the phenomenon of women starting to enter the labor force "en masse", consumer economics both gained attention and received important contributions from economic theorists. Major theoretical cornerstones include Gary Becker's Household Production Model, time allocation models and Stigler's information search theory.
Consumer socialization Mothers tend to have the most influence in consumer development and can teach consumer behavior through observation, direct discussions, and parent supervision.
Behavior informatics BI is built on classic study of behavioral science, including behavior modeling, applied behavior analysis, behavior analysis, behavioral economics, and organizational behavior. Typical BI tasks consist of individual and group behavior formation, representation, computational modeling, analysis, learning, simulation, and understanding of behavior impact, utility, non-occurring behaviors etc. for behavior intervention and management.
Consumer identity Earlier gender identity and consumer behavior research suggests that gender identity plays a role in consumer behavior and construction of consumer identity, varying from assisting in information processing to connecting individuals to the rest of the world to orchestrating an individual's perceptions to developing one's attitudes about appropriate social behaviors.
Behavior The 4 P’s are a marketing tool, and stand for Price, Promotion, Product and Place or Product Placement (Clemons, 2008). Consumer behavior is influenced greatly by business to consumer marketing, so being a prominent marketing tool, the 4 P’s will have an effect on consumer’s behavior. The price of a good or service is largely determined by the market, as businesses will set their prices to be similar to that of other business so as to remain competitive whilst making a profit (Clemons, 2008). When market prices for a product are high, it will cause consumers to purchase less and use purchased goods for longer periods of time, meaning they are purchasing the product less often. Alternatively, when market prices for a product are low, consumers are more likely to purchase more of the product, and more often. The way that promotion influences consumer behavior has changed over time. In the past, large promotional campaigns and lots of advertising would convert into sales for a business, but nowadays businesses can have success on products with little or no advertising (Clemons, 2008). This is due to the internet, and in particular social media. They rely on word of mouth from consumers using social media, and as products trend online, so sales increase as products effectively promote themselves (Clemons, 2008). Thus, promotion by businesses does not necessarily result in consumer behavior trending towards purchasing products. The way that product influences consumer behavior is through consumer willingness to pay, and consumer preferences (Clemons, 2008). This means that even if a company were to have a long history of products in the market, consumers will still pick a cheaper product over the company in question’s product if it means they will pay less for something that is very similar (Clemons, 2008). This is due to consumer willingness to pay, or their willingness to part with their money they have earned. Product also influences consumer behavior through customer preferences. For example, take Pepsi vs Coca-Cola, a Pepsi drinker is less likely to purchase Coca-Cola, even if it is cheaper and more convenient. This is due to the preference of the consumer, and no matter how hard the opposing company tries they will not be able to force the customer to change their mind. Product placement in the modern era has little influence on consumer behavior, due to the availability of goods online (Clemons, 2008). If a customer can purchase a good from the comfort of their home instead of purchasing in-store, then the placement of products is not going to influence their purchase decision.
Consumer revolution de Vries, Jan, "The Industrious Revolution: Consumer Behavior and the Household Economy, 1650 to the Present", Cambridge: CUP 2008
Organizational behavior Organizational behavior (OB) or organisational behaviour is "the study of human behavior in organizational settings, the interface between human behavior and the organization, and the organization itself." OB research can be categorized in at least three ways, including the study of (a) individuals in organizations (micro-level), (b) work groups (meso-level), and (c) how organizations behave (macro-level).
Producerconsumer problem The solution for the producer is to either go to sleep or discard data if the buffer is full. The next time the consumer removes an item from the buffer, it notifies the producer, who starts to fill the buffer again. In the same way, the consumer can go to sleep if it finds the buffer to be empty. The next time the producer puts data into the buffer, it wakes up the sleeping consumer. The solution can be reached by means of inter-process communication, typically using semaphores. An inadequate solution could result in a deadlock where both processes are waiting to be awakened. The problem can also be generalized to have multiple producers and consumers.
Behavior Consumer behavior refers to the processes consumers go through, and reactions they have towards products or services (Dowhan, 2013). It is to do with consumption, and the processes consumers go through around purchasing and consuming goods and services (Szwacka-Mokrzycka, 2015). Consumers recognise needs or wants, and go through a process to satisfy these needs. Consumer behavior is the process they go through as customers, which includes types of products purchased, amount spent, frequency of purchases and what influences them to make the purchase decision or not. There is a lot that influences consumer behavior, with contributions from both internal and external factors (Szwacka-Mokrzycka, 2015). Internal factors include attitudes, needs, motives, preferences and perceptual processes, whilst external factors include marketing activities, social and economic factors, and cultural aspects (Szwacka-Mokrzycka, 2015). Doctor Lars Perner of the University of Southern California claims that there are also physical factors that influence consumer behavior, for example if a consumer is hungry, then this physical feeling of hunger will influence them so that they go and purchase a sandwich to satisfy the hunger(Perner, 2008).
Consumer neuroscience Consumer research has existed for more than a century and has been well established as a combination of sociology, psychology, and anthropology, and popular topics in the field revolve around consumer decision-making, advertising, and branding. For decades, however, consumer researchers had never been able to directly record the internal mental processes that govern consumer behavior; they always were limited to designing experiments in which they alter the external conditions in order to view the ways in which changing variables may affect consumer behavior (examples include changing the packaging or changing a subject’s mood). With the integration of neuroscience with consumer research, it is possible to go directly into the brain to discover the neural explanations for consumer behavior. The ability to record brain activity with electrodes and advances in neural imaging technology make it possible to determine specific regions of the brain that are responsible for critical behaviors involved in consumption.