This video lesson is intended for independent study of the topic “Consumer in the system of economic relations.” As you know, economics tends to represent the consumer as a totally rational being. In this lesson we will study the modern consumer in the system of economic relations, taking as a basis the concept of “marginal utility”.

SOCIAL STUDIES 11TH GRADE

Section 1. Man and economy

Lesson 10. Consumer in the system of economic relations

Pyotr Alexandrovich Safronov

Ph.D., Researcher Faculty of Philosophy, Moscow State University named after M.V. Lomonosov

When analyzing consumer behavior, economic theory starts from the premise that this behavior is rational. We have already said that one of the central representatives of the classical school, Adam Smith, introduced the term homo economicus, i.e. economic man. This means that, being in conditions of limited resources and having ever-increasing needs, a person tries either to obtain the maximum benefit at certain costs, or to minimize costs to achieve a certain benefit.

Rational behavior presupposes the expediency of the subject's activity.

Economic theory recognizes obtaining maximum utility as such a goal.

Utility is a subjective category: when making a choice, the consumer himself decides what is more or less useful for him and what need needs to be satisfied first.

Within the framework of the neoclassical school, the so-called marginal utility theory was developed.

It is based on consideration of two main factors - total and marginal utility.

Total utility is the satisfaction that a person receives from using all the goods of a certain type that he has. Marginal utility is the change in total utility when adding one more unit of a good.

The law of diminishing marginal utility was formulated, which states that as the quantity of a good consumed increases, the utility of each additional unit will decrease.

Let us consider on the graph the relationship between total and marginal utility. The total utility curve shows that as consumption increases, utility (measured in utils) increases. However, the marginal utility curve has a negative slope, which illustrates the law of diminishing marginal utility. We see that when total utility reaches its maximum, the marginal utility of the good consumed is zero. If we assume that the consumer behaves irrationally and continues to purchase this good, then the TU curve will acquire a negative slope, and MU will have a negative value.

Note that the marginal utility curve looks the same as the demand curve. This tells us that the consumer will purchase additional units only if they are sold at a very low price. That is, the inverse dependence of the volume of demand on price is also a consequence of the diminishing nature of marginal utility.

The curve that demonstrates the situation of consumer choice is called an indifference curve (when it comes to firms, it corresponds to the production possibilities curve).

The axes show the number of different goods between which the consumer chooses.

On this graph, there is a substitution zone - a section in which it is possible to effectively replace one good with another. We can also display the budget line - it reflects what combination of consumption is available to an individual given his available income. Dots inside mean that not all of the consumer's income has been spent. If the point is located on the budget line, then all available funds have been spent.

If the point is outside this line, such a set of goods is unavailable.

Combining the indifference curve and the budget line gives us an idea of ​​the consumption equilibrium. If consumer income increases, the budget line will shift to the right.

If at the same time the price of one of the goods changes, let’s say it decreases for product X, then the budget line will change as follows (see below).

The optimal consumption is illustrated by the following graph (see below).

The Italian economist Vilfredo Pareto formulated the following judgment: “Every change that does not cause losses, but brings benefits to some people (in their own estimation), is an improvement.”

The optimal situation is when it is impossible to improve your situation without worsening any factor.

The Pareto optimum is a criterion for economic efficiency.

The theory of behavioral consumption is an important part of economic theory, since the expectations of a particular strategy for this behavior determines production activity.

This means economic sovereignty of the consumer.

Additional material

The paradox of water and diamonds

There is a well-known paradox of water and diamonds, which was first formulated by A. Smith. Its essence is this: why is the price of water, which is much healthier for humans, significantly lower than the price of diamonds? The answer to this question is given by the law of diminishing utility we examined. Water is found on Earth much more often than diamonds, which means that it is easier for us to increase the consumption of this good, which leads to a decrease in utility and, accordingly, to a drop in its price. The value of diamonds is determined not so much by their usefulness as by their rarity. A similar phenomenon is described by the Veblen effect, when, other things being equal, the higher the price of certain goods, the higher the demand for them, and a fall in price is considered as a signal of a deterioration in its quality.

Substitution effect and income effect

The substitution effect means that the relative reduction in price of one good leads to an increase in the volume of demand for it. If the price of a product has decreased, but the consumer has purchased the quantity that he initially needed, we are dealing with the income effect (i.e., the consumer still has money).

If we are dealing with normal goods, then both effects act in the same direction - they cause an increase in demand when the price decreases. If the goods in question belong to the lower category, then the income effect will mean a decrease in demand for such a good.

Text footnotes

RATIONALITY - conformity, validity, expediency, the opposite of irrationality.

NEOCLASSICAL SCHOOL is a direction in Western politics, economics, methodology, the basis of which is the theory of marginalism. It seeks to justify the optimal use of resources and identify the principles of establishing economic equilibrium in conditions of free competition, and to minimize government intervention in the economy.

PARETO, VILFREDO (1848-1923) - Italian economist and sociologist, representative of the mathematical school in political economy. I tried to mathematically substantiate the interdependence of economic factors, including price. Pareto viewed society as a pyramid, at the top of which are a few highly gifted people who make up the elite. History, according to Pareto, is an arena of constant struggle between elites for power, during which they are replaced (“circulation of elites”).

VEBLEN, THORSTEIN (1857-1929) - American sociologist, economist, publicist. The founder of the institutional direction in political economy. Doctor of Philosophy (1884). Veblen believed that in a market economy, consumers are subject to all sorts of social and psychological pressures that force them to make unwise decisions. It was thanks to Veblen that the concept of “prestigious or conspicuous consumption”, called the “Veblen effect (Paradox),” entered economic theory. Supporter of social Darwinism. He assigned a special role to the technical intelligentsia in social development. Veblen's ideas became the basis of various theories of technocracy.

NORMAL GOODS - goods whose consumption increases or decreases in proportion to the consumer's income. The income elasticity of demand for a normal good is positive.

LOWER GOODS - in consumption theory, goods for which the demand decreases as income increases. As income increases, the demand curve for that good shifts to the left. The income elasticity of demand for inferior goods is negative. A special category of inferior goods are Giffen goods.

Slide 1

Man in the system of economic relations

Slide 2

Lesson Plan
Rational consumer behavior Rational producer behavior

Slide 3

Main types of human activities in the economy:
1. PRODUCTION
2. DISTRIBUTION
3. EXCHANGE
4. CONSUMPTION

Slide 4

1. Rational consumer behavior
The influence of consumers on production in a market economy is enormous “CONSUMER DICTA”
Production is carried out for consumption, consumption actively influences production.

Slide 5

1. Rational consumer behavior
Consumers are those who purchase and use goods, order work and services for personal household needs that are not related to making a profit.
Consumers are individuals
legal entities
STATE

Slide 6

1. Rational consumer behavior

The goal of the consumer is to extract maximum benefit from the consumption of goods and services. The consumer is limited by the family budget, prices, and the range of goods and services offered.

Slide 7

1. Rational consumer behavior
In countries with a command economy, the consumer is deprived of freedom of choice. In the USSR, the consumer was deprived of the freedom to choose housing, medical institutions, and some expensive goods (cars, furniture, household appliances, etc.)

Slide 8

1. Rational consumer behavior

In a market economy, freedom of economic behavior predetermines CONSUMER SOVEREIGNTY. The owner of any type of resource independently makes decisions related to the disposal of these resources and their use.

Slide 9

1. Rational consumer behavior
?
Analyze the market for this product, choose the best option with the maximum range of additional services.

Slide 10

1. Rational consumer behavior
The family income received is usually divided
Consumed part
Accumulated part
The higher the INCOME, the larger the part allocated for accumulation.

Slide 11

1. Rational consumer behavior
Consumer spending
Mandatory expenses
Arbitrary expenses

Slide 12

1. Rational consumer behavior
The richer the country and the higher the standard of living of its population, the smaller part of the income goes to mandatory expenses. According to Engel's Law, the higher the family's income, the lower the share of its expenses on food products.
The share of food expenses is 10-15% of income
The share of food expenses is 40-48% of income

Slide 13

1. Rational consumer behavior
It is important for a rational consumer to place his savings wisely.

Slide 14

PRODUCERS are people, companies, i.e. those who make and sell goods and provide services.
What you receive for selling goods and services is called INCOME. What is spent on the production of goods or provision of services is called COSTS or COSTS. The difference between INCOME and COSTS is PROFIT.
The manufacturer's goal is to reduce costs and maximize profits.

Slide 15

2. Rational behavior of the manufacturer
MANUFACTURER'S KEY QUESTIONS:
WHAT TO PRODUCE?
HOW TO PRODUCE?
FOR WHOM TO PRODUCE?

Slide 16

2. Rational behavior of the manufacturer
To conduct economic activities rationally, the MANUFACTURER must resolve the following issues:
How can you achieve your production goals with limited resources?
How to combine available resources to minimize costs?
How to increase the volume of output with existing resources?

Municipal educational institution Nekouzskaya secondary school

Man in the system of economic relations

Completed by: history teacher Struts O.N.

Nekouz, 2013

• Rational consumer behavior
• Rational behavior of the manufacturer

Rational behavior

Thoughtful behavior that involves comparing the results of actions with costs

Who is a consumer?

Consumer – this is someone who purchases goods and services for personal needs that are not related to making a profit. Each of us is a consumer when trying to satisfy our needs .

Consumer Goal – extract maximum benefit from the consumption of goods and services.

Consumption restrictions

• Family budget

• High prices

• Range of goods and services

• The Problem of Rational Choice

Ways to satisfy needs

Labor market

Market of goods and services

Main consumer questions

• What should you spend your income on first?

• How to choose a product or service of the best quality at a low price?

• How to reduce financial losses?

• How to save income?

Rational choice

Decision-making

Awareness of the need

Evaluation of possible options

Search for information

Types of expenses

Mandatory

free

(food, clothing, transportation, utilities, etc.)

(books, paintings, cars, jewelry, vouchers, etc.)

"Engel's Law"

The higher the family's income, the lower its share of expenses on food products.

Share of food expenses

• Bank account

• Purchase of securities

• Purchase of real estate

• Insurance

Who are the manufacturers?

Manufacturers – these are all those who manufacture and sell us goods and services .

Manufacturer's goal – get as much profit as possible.

The main questions of the manufacturer (the triune question of economics)

• What to produce?

• How to produce?

• For whom to produce?

Problems of production organization

• Limited resources

• Costs

• Expansion of production

How to increase production volume?

Changing the amount of resources

Improving the quality of resources

Factors of labor productivity growth

• Division of labor

• Technical progress

• Level of education and professional training

• The consumer’s ability to maximally satisfy his needs for goods and services depends on income and its rational use
• In order to ensure the profitability of your production, you can introduce technical innovations, save raw materials, and improve professional skills.

relationships.

Economic activity

DISTRIBUTION

EXCHANGE

CONSUMPTION

PRODUCTION

The Problem of Needs

Resource problem

Human needs

– Biological (organic, material) – needs for food, clothing, housing, etc.

– Social – needs for communication with other people, social activities, social recognition, etc.

– Spiritual (ideal, cognitive) – needs for knowledge, creative activity, creation of beauty, etc.

Economic resources (factors of production)

MATERIAL

HUMAN

Earth

work force

capital

(work)

entrepreneurship

Resources - the opportunities available to society to create goods and satisfy needs.

Rational behavior – This is, first of all, thoughtful behavior that involves comparing the results of actions with costs.

Economic behavior - image, method, character

economic actions of economic entities

in certain prevailing economic conditions

activities.

Consumer is the one who purchases and uses goods,

orders work and services for personal household needs,

not related to profit making .

TARGET

Getting the most out of consumption goods and services.

Consumption – use, use, application

products, things, benefits, goods and services in order to satisfy

needs.

Restrictions for the consumer

Range of offered

Commodity prices

Consumer,

family budget-

goods and services

and services

cash balance

income and expenses

families.

Consumer basket

Living wage

"Poverty line"

- Decision-making

• Assessment of possible

purchase options

• Search for information

about a product or service

• Awareness

necessity

purchases

Consumer basket – total cost of provision

average consumption of a person (family)

in a certain period of time.

Germany - 475 points

UK – 350

USA – 300

France - 250

Russia -156

(cost 7108 rub.)

"Poverty line" – officially established minimum

family income level.

2013 – 13% (18 million people)

Living wage – minimum amount of money

funds, income sufficient to satisfy objectively

necessary needs.

2013 – 7095 rub.

2014 (forecast) -8200 rub.

Topic: Man in the economic system

relationships.

Consumer income and expenses

Consumer income - this is the amount of money received over a certain period of time and intended for the purchase of goods and services for personal consumption.

Nominal income –

income calculated in

in monetary terms,

excluding purchase price

ability of money, level

prices, inflation.

Real income –

quantity of goods and services,

which can be purchased

by the amount of nominal income.

Sources

business income

social

salary

and other activities

payments

pay

income from

property

Consumer income and expenses

Consumer consumption is the amount of money spent

for a certain period of time to acquire goods and

services for personal consumption.

Types of consumer spending

mandatory,

arbitrary

minimum required

Relationship between income and expenses

1) the more income a consumer receives, the more amount he is able to spend on consumption;

2) the more income the consumer receives, the greater the amount of savings;

3) the higher the family income, the lower the share of food expenses

and more for durable goods, and also more

share of savings.

Consumer income and expenses

Engel's Law (1821-1896):

the higher the family income, the less

the share of its expenses on food products and above

spending on luxury goods, fine items, savings.

In the USA, the share of food expenses is 10-15%

In Russia - from 40 to 48%.

Level of development of society

The quality of life = level

life + conditions and

safety

labor + cultural

level + physical

development, etc.

Standard of living - this is the level

welfare of the population,

degree of satisfaction of basic

people's vital needs.

Rational behavior of the manufacturer

Manufacturers – these are people, firms, enterprises. those. all those who

manufactures and sells us goods and provides services.

TARGET

Getting as much profit as possible while

at the lowest cost.

The need for rational behavior

• - How, with limited resources, can you achieve your production goals?

• - How to combine production resources so that costs are minimal?

• - How to increase the volume of production with existing

resources?

Resource efficiency

The main indicator is productivity.

Productivity ≠ labor productivity.

Performance

The amount of benefits that can be obtained

This is the volume of goods and services created per unit of cost;

from the use of a unit of a certain type of resource during a fixed period.

Ways to increase productivity (production volume)

Increasing resource efficiency

Expanding the use of economic resources

extensive path

intensive path

Quantitative change in resources (increase in production capacity, amount of natural resources used, number of employed workers)

Improving the quality characteristics of resources, improving their productivity or productivity

Labor productivity - effectiveness = productivity

labor, which is measured by the quantity of production,

produced per unit of time.

Factors (methods) of labor productivity growth

1) division of labor, or specialization;

2) use of new equipment or technology;

3) increasing the level of education and professional

employee training;

4) increasing the efficiency of management decisions.

Own-

relationships between people that develop in the process of appropriation and economic use of property.

Own

Right to own

Own

Right to own

D.z. § 11, questions 1-5 p. 137, repeat § §1-3

1 slide

2 slide

Lesson plan Rational consumer behavior Rational producer behavior

3 slide

1. Rational consumer behavior The main types of human activity in the economy: 1. PRODUCTION 2. DISTRIBUTION 3. EXCHANGE 4. CONSUMPTION

4 slide

1. Rational consumer behavior The influence of consumers on production in a market economy is enormous “CONSUMER DICTATOR” Production is carried out for consumption, consumption actively influences production.

5 slide

1. Rational consumer behavior Consumers are those who purchase and use goods, order work and services for personal household needs that are not related to making a profit. Consumers are individuals legal entities STATE

6 slide

1. Rational consumer behavior The consumer's goal is to extract maximum benefit from the consumption of goods and services. The consumer is limited by the family budget, prices, and the range of goods and services offered.

7 slide

1. Rational consumer behavior In countries with a command economy, the consumer is deprived of freedom of choice. In the USSR, the consumer was deprived of the freedom to choose housing, medical institutions, and some expensive goods (cars, furniture, household appliances, etc.)

8 slide

1. Rational consumer behavior In a market economy, freedom of economic behavior predetermines CONSUMER SOVEREIGNTY. The owner of any type of resource independently makes decisions related to the disposal of these resources and their use.

Slide 9

1. Rational consumer behavior? Analyze the market for this product, choose the best option with the maximum range of additional services.

10 slide

1. Rational consumer behavior The received family income is usually divided into the consumed part. The accumulated part. The higher the INCOME, the larger the part allocated for accumulation.

11 slide

1. Rational consumer behavior Consumer expenses Mandatory expenses Voluntary expenses

12 slide

1. Rational consumer behavior The richer the country and the higher the standard of living of its population, the smaller part of the income goes to mandatory expenses. According to Engel's Law, the higher the family's income, the lower the share of its expenses on food products. The share of food costs is 10-15% of income The share of food costs is 40-48% of income

Slide 13

1. Rational consumer behavior It is important for a rational consumer to wisely place his savings.

Slide 14

2. Rational behavior of a manufacturer PRODUCERS are people, firms, i.e. those who make and sell goods and provide services. What you receive for selling goods and services is called INCOME. What is spent on the production of goods or provision of services is called COSTS or COSTS. The difference between INCOME and COSTS is PROFIT. The manufacturer's goal is to reduce costs and maximize profits.

15 slide

2. Rational behavior of the manufacturer MAIN QUESTIONS FOR THE MANUFACTURER: WHAT TO PRODUCE? HOW TO PRODUCE? FOR WHOM TO PRODUCE?

16 slide

2. Rational behavior of the manufacturer To conduct economic activities rationally, the MANUFACTURER must solve the following questions: How, given limited resources, to achieve the goals of its production? How to combine available resources to minimize costs? How to increase the volume of output with existing resources? ?