Hulu: An Evil plot to Destroy the World Essay

All quotations and references refer to â€Å" Hulu: An Evil plot to Destroy the World† unless otherwise noted. 1) Hulu succeeded while everyone predicted its failure due to the following reasons: * Hulu harnessed existing technologies namely online video and broadcast media to create a new platform that was â€Å"focused on helping users find and enjoy the world’s premium, professionally produced content when where and how they want it†. The platform brought together professional content owners/providers, advertisers and content consumers/users in a platform mediated network. * Rather than choose to be a destination site or syndicate content, Hulu chose to be both by being an aggregator of online video. There were web sites that did this for user generated content but Hulu was a leader in this space for professionally generated content. * The business model for Hulu’s platform is 100% advertising supported. * Hulu’s platform model consists of 3 nodes – content providers, advertisers and users * The ‘subsidy side’ in this network is the users who use the platform for free while the ‘money side’ is the advertisers who pay Hulu for running their advertisements. Hulu on the other hand pays content providers for showing their content on the platform. The more the number of users on Hulu the more advertisers value the platform and are attracted to advertise on it. Also, the more the content available on Hulu the more users are attracted to the platform and subsequently, the more the revenue that can be generated from advertising. * Hulu leveraged the cross side network effect between content providers and users by partnering strategically with over 170 content providers including the most popular broadcast and cable networks in the United States. The content providers â€Å"participated in the value created through the distribution of their content†, providing the incentive for them to continue their support of the Hulu platform. * Hulu partnered with 30 affiliated websites including those whose users represented 96% of the monthly unique US-based web users to bring content to its audience and to leverage the cross side network effect between users and advertisers to increase revenues. * Hulu also focused on users and offered its service free to them thereby maximising the cross-side network effects between users and advertisers on its platform resulting in increased revenues generated from advertisers. 2) Hulu’s business strategy is to be focused â€Å"on helping users find and enjoy the world’s premium professionally produced content when, where and how they want it†. Hulu does this by using Internet technology to bring free content to its users anywhere at any time. Hulu is a first mover in this space and is currently enjoying the first mover advantage. However with the ubiquity of internet technology accompanied by lower costs and the commoditization of the technology, the barrier to entry will be reduced and more players will be attracted to the profitable online video business, eating into Hulu’s profitability and success. Also, the increase in IT investments in the internet age causes â€Å"a Winner-take-all dynamic and high turbulence, as each group of dominant innovators is threatened by succeeding waves of innovation† (McAfee and Brynjolfsson, 2008) in Schumpeterian competition. This makes Hulu’s success vulnerable. The case mentions that there is already an emergence of competitive threat from â€Å"TV Everywhere† and even though CEO, Jason Kilar discounts the effect on Hulu, the new entrant is gaining some clout and Broadcasting & Cable has warned that † TV Everywhere was â€Å"starting to look like a real competitor to Hulu.†Ã¢â‚¬  Sustained success for Hulu in what is bound to be an increasingly competitive market will depend on Hulu’s Management and their ability to continue to maintain frugality, drive innovation, operational efficiencies and differentiate their products and services to gain competitive advantage and continue to dominate the market. 3) Input data – Basic – Name, Gender, Age, marital status Contact – address (state, city, zip code), phone number Other- favourite genre, previous shows watched, sites visited previously, ratings of previous shows watched. a) BI techniques i) Using Market basket Analysis Rule: if {Gender = female} then {watches real estate shows} Action: Show Ad Selector for real estate companies and related products when a female user is on Hulu ii) Using Market basket Analysis Rule: if {Married and Age>50 and lives in California} then {has watched >2 court shows in the past and previously visited a tax filing website} Action: Approach tax filing website to place their advertisement on Hulu when court shows are playing. iii) Using user based Collaborative filtering Rule: Find users ‘similar’ to current user by choosing those with the highest similarity coefficient between them and this user on the ratings of other shows. Use a combination of their similarity coefficients to predict current user’s rating for a crime show. Action: if user’s predicted rating for the crime show is high, then advertise any new crime show when user is on Hulu or other affiliate websites. b) Monetization These techniques allow Hulu to increase the click through rates as well as transaction conversion rates for its advertisements because they are targeted at users most likely to respond. Since advertisers are interested in traffic, Hulu can increase revenues by demonstrating to advertisers the number of users that can be targeted using these techniques and the subsequent increase in click through and conversion rates. 4) IT Security Plan for Hulu a) People * Management should make security a high priority and include it in Hulu’s business strategy * Train Hulu employees on the importance of security-keeping passwords confidential and not sharing passwords * Train employees on privacy policies b) Processes * Create security policies and procedures establishing mandatory minimum security standards * Standards should include provisions on customer privacy * Ensure all affiliate websites adhere to mandatory minimum security standards * Set procedures for security incidents * Review security policies annually to address new security threats to the online video industry c) Technology * Encrypt all customer data * Install antivirus software on all servers and computers and keep installations up to date * Have multi-site backup of data * Install monitoring software for servers and network * Incorporate systems logging to track access to Hulu’s IT infrastructure * Ensure firewalls are installed, enabled and have sufficient filters to protect from outside intrusion * Engage ‘Ethical Hacking’ vendors to audit systems annually in order to identify areas of vulnerability. References Andrew McAfee &Erik Brynjolfsson (July-August 2008). What Makes a competitive difference. Harvard Business Review, pg 100.

Advertising Print Essay

It is my great pleasure to take this opportunity to acknowledge the contribution of number of people who helped me in successful completing of this project. Firstly I would like to express my heartily gratitude and sincere thanks to Mr. Agarwal Sir for allowing me to do this project and gratefully acknowledge the contribution by him without his support and valuable suggestion this project could not be successful. I offer my heart self regards to Mrs Aradhana Albert for her continuous guidance, monitoring and informal discussion which become light for me in the entire duration of this project in overcoming the barrier and reaching this stage. Finally I am sincerely thankful to others who have directly or indirectly helped me in the completion of the project. (SHILPA JINDAL) 1|Page PREFACE The title of my project is ETHICAL ISSUES IN ADVERTISING. Advertising can be defined as any paid form of non personal presentation and promotion of ideas, goods or services through mass media such as newspapers, magazines, television or radio by an identified sponsor So basically advertising is a mass communications device through which companies promote or market their product to the consumer, and this enables them to make informed consumption decisions. As now a days advertisements have a very great impact on the consumer’s behavior; it plays very important role in our Indian economy directly or indirectly. so if it become unethical it leads our society in wrong direction. To overcome these problems certain ethical standards are set up by the government and I want to throw a light on this only. As it is a very wide field so here I am restricted to the electronic media only. We have to think about this unethical problem and this wrong presentation of business. So that we can give good ethics to our youngsters. 2|Page EXECUTIVE SUMMARY TITLE The title of the project is â€Å"ETHICAL ISSUES IN ADVERTISEMENT†. Advertising can be defined as any paid form of non personal presentation and promotion of ideas, goods or services through mass media such as newspapers, magazines, television or radio by an identified sponsor. INTRODUCTION Advertising plays an important part in our everyday lives as it enables us to choose between different ranges of products. These products are promoted through different types of advertisements and cater to all types of markets. On the other hand advertising is plagued with social and ethical issues as it results in over consumption and waste of resources. Advertising creates an environment where it abuses certain values and interests that are not universally agreed upon. For example in 2001 Yves Saint Laurent launched a fragrance called ‘Opium which featured a naked model. This stirred controversy and people found it offensive and sex was being used openly to promote a perfume. For a fashion magazine the advertisement was fine but for billboards it was inappropriate and some social groups found it morally and ethically wrong. Some times advertising draws mixed response from the public, while sometimes it becomes controversial. SCOPE AND OBJECTIVE OF STUDY Many advertisements are designed to generate increased consumption of those products and services through the creation and reinvention of the â€Å"brand image†. For these purposes, advertisements sometimes embed their persuasive message with factual information. Every major medium is used to deliver these messages, including television, radio, cinema, magazines, newspapers, video games, the Internet, carrier bags and billboards. Advertising is often placed by an advertising agency on behalf of a company or other organization. 3|Page Advertising is a powerful communication force, highly visible and one of the most important tools of marketing communication that helps to sell products, services, ideas and images etc. Many believe that advertising reflects the need of the times. Whether one likes it or not, advertisements are everywhere. They are seen on the walls, on the back of buses, in play grounds, on the occasion of sports event, on roadsides, in the stores and even on aeroplanes. Advertisements are seen in newspapers, in magazines, on the television, on internet and are even heard on radio. The fact is that we are being bombarded with advertisements day in and day out from all imaginable media. The average consumer is exposed to a very large number of advertisements every day, particularly the urban and semi urban population. In spite of this, to the dismay and irritation of some and enjoyment of others, advertisement will continue to make their presence felt in our lives and influence our lives in many unsuspecting ways because of rapid changes in macro- environment and in our perception, impressions, feelings, attitudes and behaviour. It seems almost impossible to remain totally neutral and not take any notice of modern-day advertising. The most visible part of the advertising process is the advertisements that we see, read, or hear and praise or criticise. Many suitable adjectives are used to describe advertising, depending on how an individual is reacting, such as great, dynamic, alluring, fascinating, annoying, boring, intrusive, irritating and offensive, etc. METHODOLOGY For completing this project the required information or the raw data is gathered from the sources like websites , journals, magazines ,text books etc which is the most difficult task of this project making as it is the most time consuming process. but overall this topic is quite interesting to gain knowledge about the ethics in ads the controversial ads also. The purpose of taking this topic is that in the present scenario advertisement has a great impact on the consumer’s behavior so if it becomes unethical it will lead the society in the wrong direction. To overcome these problems certain ethical standards are set up by 4|Page the government or regulation bodies and i want to throw a light on this only. Ethics basically refers to what is right, good or consistent with virtue. Advertising generates complex ethical questions which have to be considered, as this mode of communication commits some highly controversial ethical acts which are damaging to the society as a whole. SUMMARY OF FINDINGS AND RECOMMENDATIONS Here I am restricted to the ethical issues of advertisement related to television media only as this subject has a very wide arena to be focused on. Her I just want to know that how much these set standards are successful in maintaining the dignity of the Indian’s beliefs and their feeling. 5|Page RESEARCH METHODOLOGY TITLE – Ethical Issues In Advertising Advertising is a form of communication that typically attempts to persuade potential customers to purchase or to consume more of a particular brand of product or service. Ethics refers to principles that define behavior as right, good and proper. Such principles do not always dictate a single â€Å"moral† course of action, but provide a means of evaluating and deciding among competing options. In the present scenario advertisement has a great impact on the consumer’s behavior so if it becomes unethical it will lead the society in the wrong direction. To overcome these problems certain ethical standards are set up by the government or regulation bodies. DURATION OF PROJECT This is a very long term project so we have been provided with a period of one month for the completion. To make it easy this period was bifurcated into various sections of making blue print, abstract, collecting primary data, secondary data, making preliminary report, secondary report and final report at the end which makes the whole process easy to attempt. OBJECTIVE Advertising plays an important part in our everyday lives as it enables us to choose between different ranges of products. These products are promoted through different types of advertisements and cater to all types of markets. On the other hand advertising is 6|Page plagued with social and ethical issues as it results in over consumption and waste of resources. ‘Advertising creates an environment where it abuses certain values and interests that are not universally agreed upon. Advertisements as Mirrors of prevailing norms Marketers claim that advertising simply mirrors the attitudes and values of the surrounding culture. No doubt advertising, like the media of social communications in general, does act as a mirror. But, also like media in general. It is a mirror that helps shape the reality it reflects, and sometimes it presents a distorted image of reality. Advertisers are selective about the values and attitudes to be fostered and encouraged, promoting some while ignoring others The purpose of taking this topic is that in the present scenario advertisement has a great impact on the consumer’s behavior so if it becomes unethical it will lead the society in the wrong direction. To overcome these problems certain ethical standards are set up by the government or regulation bodies and I want to throw a light on this only. I can differentiate my objectives for taking this topic as follows: †¢ To know the various ethical marketing strategies of the market leaders. †¢ To know how can we make a ethical advertisement. †¢ To know the impact of unethical advertisement on the society. †¢ To enhance my marketing skills. †¢ To know the role of advertisement in the success of any organization. TYPE OF RESEARCH As I took the data from magazines , books, internet links , journals and news papers. It is research of descriptive type. SCOPE OF STUDY Advertising is a powerful communication force, highly visible and one of the most important tools of marketing communication that helps to sell products, services, ideas and images etc. Many believe that advertising reflects the need of the times. Whether one likes it or not, advertisements are everywhere. They are seen on the walls, on the back of 7|Page buses, in play grounds, on the occasion of sports event, on roadsides, in the stores and even on aero planes. Advertisements are seen in newspapers, in magazines, on the television, on internet and are even heard on radio. Here I am focusing mainly on the media as a source of advertising. The fact is that we are being bombarded with advertisements day in and day out from all imaginable media. The average consumer is exposed to a very large number of advertisements everyday, particularly the urban and semi urban population. In spite of this, to the dismay and irritation of some and enjoyment of others, advertisement will continue to make their presence felt in our lives and influence our lives in many unsuspecting ways because of rapid changes in macro- environment and in our perception, impressions, feelings, attitudes and behaviors. It seems almost impossible to remain totally neutral and not take any notice of modern-day advertising. The most visible part of the advertising process is the advertisements that we see, read, or hear and praise or criticize. 8|Page CORE STUDY INTRODUCTION Advertising can be defined as any paid form of non personal presentation and promotion of ideas, goods or services through mass media such as newspapers, magazines, television or radio by an identified sponsor So basically advertising is a mass communications device through which companies promote or market their product to the consumer, and this enables them to make informed consumption decisions. Advertising is a powerful communication force, highly visible and one of the most important tools of marketing communication that helps to sell products, services, ideas and images etc. Many believe that advertising reflects the need of the times. Whether one likes it or not, advertisements are everywhere. They are seen on the walls, on the back of buses, in play grounds, on the occasion of sports event, on roadsides, in the stores and even on aeroplanes. Advertisements are seen in newspapers, in magazines, on the television, on internet and are even heard on radio. The fact is that we are being bombarded with advertisements day in and day out from all imaginable media. The average consumer is exposed to a very large number of advertisements everyday, particularly the urban and semi urban population. In spite of this, to the dismay and irritation of some and enjoyment of others, advertisement will continue to make their presence felt in our lives and influence our lives in many unsuspecting ways because of rapid changes in macro- environment and in our perception, impressions, feelings, attitudes and behaviour. It seems almost impossible to remain totally neutral and not take any notice of modern-day advertising. The most visible part of the advertising process is the advertisements that we see, read, or hear and praise or criticise. Many suitable 9|Page adjectives are used to describe advertising, depending on how an individual is reacting, such as great, dynamic, alluring, fascinating, annoying, boring, intrusive, irritating and offensive, etc. Advertising plays an important part in our everyday lives as it enables us to choose between different ranges of products. These products are promoted through different types of advertisements and cater to all types of markets. . Advertising enables producers to expand their markets and therefore take advantage of economies of scale to reduce unit production costs Many advertisements are designed to generate increased consumption of those products and services through the creation and reinvention of the â€Å"brand image†. For these purposes, advertisements sometimes embed their persuasive message with factual information. Every major medium is used to deliver these messages, including television, radio, cinema, magazines, newspapers, video games, the Internet, carrier bags and billboards. Advertising is often placed by an advertising agency on behalf of a company or other organization. On the other hand advertising is plagued with social and ethical issues as it results in over consumption and waste of resources. ‘Ethics basically refers to what is right, good or consistent with virtue. Advertising generates complex ethical questions which have to be considered, as this mode of communication commits some highly controversial ethical acts which are damaging to the society as a whole. It promotes overselling, exploitation of vulnerable groups, vulgarity, offending the public, promoting socially harmful values or behavior and intrusion of privacy. Advertising creates an environment where it abuses certain values and interests that are not universally agreed upon. For example in 2001 Yves Saint Laurent launched a fragrance called ‘Opium which featured a naked model. This stirred controversy and people found it offensive and sex was being used openly to promote a perfume. For a fashion magazine the advertisement was fine but for billboards it was inappropriate and 10 | P a g e some social groups found it morally and ethically wrong. Some times advertising draws mixed response from the public, while sometimes it becomes controversial. NEED OF ADVERTISING Advertising is the promotion of a company’s products and services carried out primarily to drive sales of the products and services but also to build a brand identity and communicate changes or new product /services to the customers. Advertising has become an essential element of the corporate world and hence the companies allot a considerable amount of revenues as their advertising budget. There are several reasons for advertising some of which are as follows: †¢ Increasing the sales of the product/service †¢ Creating and maintaining a brand identity or brand image. †¢ Communicating a change in the existing product line. †¢ Introduction of a new product or service. †¢ Increasing the buzz-value of the brand or the company. Significance of Advertising Basically advertising creates wants but does not fulfill them, a person may see an advertisement for a product, it might be glossy and fancy and he might be attracted to buy the product. He might eventually buy it but it will not satisfy him it will just be a waste. It’s a short term material satisfaction which just drives the economy by over consumption of goods and services. It keeps the consumer in doubt about what to buy and in what quantities and this doubt in turn has ethical implications. Four reasons are attributed to the fugacious nature of the way advertising practices are being carried out in developing countries. 11 | P a g e 1. The role of Information and Communication technologies: As ICTs evolve so do marketing practices. If yesterday it was television that revolutionized the way advertisements could create a lasting impact on the consumer, then today the internet and phone text messages are doing just that. 2. The world today is an increasingly global village: Social and ethnic boundaries are fast falling in the wake of cable television and the like. 3. Rapid economic expansions in countries like China and India have meant that marketers have to quickly respond to the changing socio-economic scenarios. Millions of people have entered the middle class and millions more are poised to do so. For marketers, the consequences can be mind boggling-as incomes and spending powers rise, marketers have to respond to increasing demands from consumers. 4. Better and improved marketing research has meant that the entire populace is not seen in totality but rather as a congeries of different types of consumers. TYPES OF ADVERTISING There can be several branches of advertising. Mentioned below are the various categories or types of advertising. 12 | P a g e Celebrity Broadcast advertising Advertising Print OutdoorAdvertising Advertising TYPES OF Infomercials ADVERTISING Public Service Advertising Covert Advertising Surrogate Advertising 13 | P a g e 1. Print Advertising – Newspapers, Magazines, Brochures, and Fliers and less popular newspaper would cost far less than placing an advertisement in a popular newspaper The print media have always been a popular advertising medium. Advertising products via newspapers or magazines is a common practice. In addition to this, the print media also offers options like promotional brochures and fliers for advertising purposes. Often the newspapers and the magazines sell the advertising space according to the area occupied by the advertisement, the position of the advertisement (front page/middle page), as well as the readership of the publications. For instance an advertisement in a relatively new with a high readership. The price of print ads also depend on the supplement in which they appear, for example an advertisement in the glossy supplement costs way higher than that in the newspaper supplement which uses a mediocre quality paper. 2. Outdoor Advertising–Billboards, Kiosks, Tradeshows and Events 14 | P a g e Outdoor advertising is also a very popular form of advertising, which makes use of several tools and techniques to attract the customers outdoors. The most common examples of outdoor advertising are billboards, kiosks, and also several events and tradeshows organized by the company. The billboard advertising is very popular however has to be really terse and catchy in order to grab the attention of the passersby. The kiosks not only provide an easy outlet for the company products but also make for an effective advertising tool to promote the company’s products. Organizing several events or sponsoring them makes for an excellent advertising opportunity. The company can organize trade fairs, or even exhibitions for advertising their products. If not this, the company can organize several events that are closely associated with their field. For instance a company that manufactures sports utilities can sponsor a sports tournament to advertise its products. 3. Broadcast advertising – Television, Radio and the Internet The radio jingles have been very popular advertising media and have a large impact on the audience, which is evident in the fact that many people still remember and enjoy the popular radio jingles Broadcast advertising is a very popular advertising medium that constitutes of several 15 | P a g e branches like television, radio or the Internet. Television advertisements have been very popular ever since they have been introduced. The cost of television advertising often depends on the duration of the advertisement, the time of broadcast (prime time/peak time), and of course the popularity of the television channel on which the advertisement is going to be broadcasted. The radio might have lost its charm owing to the new age media however the radio remains to be the choice of small-scale advertisers. 4. Covert Advertising – Advertising in Movies Covert advertising is a unique kind of advertising in which a product or a particular brand is incorporated in some entertainment and media channels like movies, television shows or even sports. There is no commercial in the entertainment but the brand or the product is Subtly ( or sometimes evidently) showcased in the entertainment show. Some of the famous examples for this sort of advertising have to be the appearance of brand Nokia which is displayed on Tom Cruise’s phone in the movie Minority Report, or the use of Cadillac cars in the movie Matrix Reloaded. 16 | P a g e surrogate Common examples include of Fosters and Kingfisher beer help Indirectly brands, which are often seen Advertising to promote their brand with – the Advertising advertising. 5. Surrogate Surrogate advertising is prominently seen in cases where advertising a particular product is banned by law. Advertisement for products like cigarettes or alcohol which are injurious to heath are prohibited by law in several countries and hence these companies have to come up with several other products that might have the same advertising as an effective energy communication medium to convey AIDS, socially relevant messaged about like 17 | P a g e important matters and social welfare causes Causes integrity, – Advertising for Social political 6. Public Service Advertising conservation, bottles of the same brand. deforestation, illiteracy, poverty and people of the cigarettes or beer so on. ent or the summary of an interesting point. You can position the text box anywhere in the document. Use the Text Box Tools tab to change the formatting of the pull quote text box. ] brand name and indirectly remind Today public service advertising has been increasingly used in a non-commercial fashion in several countries across the world in order to promote various social causes. In USA, the radio and television stations are granted on the basis of a fixed amount of Public service advertisements aired by the channel. 7. Celebrity Advertising 18 | P a g e and the modern day consumer getting immune to the exaggerated claims made in a majority of advertisements, there exist a section of advertisers that Using celebrities for advertising involves signing up celebrities for advertising campaigns, which consist of all sorts of advertising including, television ads or even print advertisements. Although the audience is getting smarter and smarter still bank upon celebrities and their popularity for advertising their products. Infomercials There are two types of infomercials, described as long form and short form. Long form infomercials have a time length of 30 minutes. Short form infomercials are 30 seconds to 2 minutes long. Infomercials are also known as direct response television (DRTV) commercials or direct response marketing. The main objective in an infomercial is to create an impulse purchase, so that the consumer sees the presentation and then immediately buys the product through the advertised toll-free telephone number or website. Infomercials describe, display, and 19 | P a g e often demonstrate products and their features, and commonly have testimonials from consumers and industry professionals. ETHICS 1. INTRODUCTION In this era of globalization &multinational competition, ethical practices in business are assuming importance as relationships with various suppliers& customers are shaped by ethical practices& mutual trust. So, ethical decision taking assumes importance in today’s corporate world. 2. What Is Ethics? Ethics refers to principles that define behavior as right, good and proper. Such principles do not always dictate a single â€Å"moral† course of action, but provide a means of evaluating and deciding among competing options. The terms â€Å"ethics† and â€Å"values† are not interchangeable. Ethics is concerned with how a moral person should behave, whereas values are the inner judgments that determine how a person actually behaves. Values concern ethics when they pertain to beliefs about what is right and wrong. Most values, however, have nothing to do with ethics. For instance, the desire for health and wealth are values, but not ethical values. 3. The Importance of Universality Most people have convictions about what is right and wrong based on religious beliefs, cultural roots, family background, personal experiences, laws, organizational values, professional norms and political habits. These are not the best values to make ethical decisions by — not because they are unimportant, but because they are not universal. In 20 | P a g e contrast to consensus ethical values — such basics as trustworthiness, respect, responsibility, fairness, caring and citizenship — personal and professional beliefs vary over time, among cultures and among members of the same society. They are a source of continuous historical disagreement, even wars. There is nothing wrong with having strong personal and professional moral convictions about right and wrong, but unfortunately, some people are â€Å"moral imperialists† who seek to impose their personal moral judgments on others. The universal ethical value of respect for others dictates honoring the dignity and autonomy of each person and cautions against selfrighteousness in areas of legitimate controversy. 4. Why Be Ethical? People have lots of reasons for being ethical: †¢ There is inner benefit. Virtue is its own reward. †¢ There is personal advantage. It is prudent to be ethical. It’s good business. †¢ There is approval. Being ethical leads to self-esteem, the admiration of loved ones and the respect of peers. †¢ There is religion. Good behavior can please or help serve a deity. †¢ There is habit. Ethical actions can fit in with upbringing or training. There are obstacles to being ethical, which include: †¢ The ethics of self-interest When the motivation for ethical behavior is self-interest, decision-making is reduced to risk-reward calculations. If the risks from ethical behavior are high – or the risks from unethical behavior are low and the reward is high – moral principles succumb to expediency. †¢ This is not a small problem 21 | P a g e Many people cheat on exams, lie on resumes, and distort or falsify facts at work. The real test of our ethics is whether we are willing to do the right thing even when it is not in our self-interest. †¢ The pursuit of happiness It depends on how one defines happiness. Our values, what we prize and desire, determine what we think will make us happy. We are free to pursue material goals and physical sensations, but that alone rarely (if ever) leads to enduring happiness. It more often results in a lonely, disconnected, meaningless existence. The morally mature individual finds happiness in grander pursuits than money, status, sex and mood-altering substances. A deeper satisfaction lies in honoring universal ethical values, that is, values that people everywhere believe should inform behavior. That unity between principled belief and honorable behavior is the foundation for real happiness. †¢ Ethical Principle in Advertising All advertising should be legal, decent, honest and truthful. Every advertisement should be prepared with a due sense of social responsibility and should conform to the principles of fair competition, as generally accepted in business. No advertisement should be such as to impair public confidence in advertising. †¢ Decency Advertisements should not contain statements or visual presentations which offend prevailing standards of decency †¢ Honesty Advertisements should be so framed as not to abuse the trust of consumers or exploit their lack of experience or knowledge. †¢ Social Responsibility 22 | P a g e 1. Advertisements should not condone any form of discrimination, including that based upon race, national origin, religion, sex or age, nor should they in any way undermine human dignity. 2. Advertisements should not (without justifiable reason) play on fear. 3. Advertisements should not appear to condone or incite violence, or to encourage unlawful or reprehensible behavior. 4. Advertisements should not play on superstition. †¢ Truthful presentation Advertisements should not contain any statement or visual presentation which directly or by implication, omission, ambiguity or exaggerated claim is likely to mislead the consumer, in particular with regard to: 1. characteristics such as: nature, composition, method and date of manufacture, range of use, efficiency and performance, quantity, commercial or geographical origin or environmental impact; 2. the value of the product and the total price actually to be paid; 3. delivery, exchange, return, repair and maintenance; 4. terms of guarantee; 5. copyright and industrial property rights such as patents, trade marks, designs and models and trade names; 6. official recognition or approval, awards of medals, prizes and diplomas; 7. the extent of benefits for charitable causes. 8. Advertisements should not misuse research results or quotations from technical and scientific publications. Statistics should not be so presented as to exaggerate the validity of advertising claims. Scientific terms should not be used to falsely ascribe scientific validity to advertising claims. †¢ Comparisons 23 | P a g e Advertisements containing comparisons should be so designed that the comparison is not likely to mislead, and should comply with the principles of fair competition. Points of comparison should be based on facts that can be substantiated and should not be unfairly selected. †¢ Unassembled Merchandise When advertised merchandise requires partial or complete assembly by the purchaser, the advertising should disclose that fact, e. g. , â€Å"unassembled,† â€Å"partial assembly required. † †¢ Testimonials Advertisements should not contain or refer to any testimonial or endorsement unless it is genuine, verifiable, relevant and based on personal experience or knowledge. Testimonials or endorsements that have become obsolete or misleading through passage of time should not be used †¢ Portrayal or imitation of personal property Advertisements should not portray or refer to any persons, whether in a private or a public capacity, unless prior permission has been obtained; nor should advertisements without prior permission depict or refer to any person’s property in a way likely to convey the impression of a personal endorsement. †¢ Exploitation of goodwill Advertisements should not make unjustifiable use of the name, initials, logo and/or trademarks of another firm, company or institution nor should advertisements in any way take undue advantage of another firm, person or institution’s goodwill in its name, trade name or other intellectual property, nor should advertisements take advantage of the goodwill earned by other advertising campaigns. †¢ Imitation 24 | P a g e 1. Advertisements should not imitate the general layout, text, slogan, visual presentation, music and sound effects, etc. , of any other advertisements in a way that is likely to mislead or confuse the consumer. 2. Where advertisers have established distinctive advertising campaigns in one or more countries, other advertisers should not unduly imitate these campaigns in the other countries where the former may operate, thus preventing them from extending their campaigns within a reasonable period of time to such countries

Balance Of Diversity And Unity Cultural Studies Essay

Balance Of Diversity And Unity Cultural Studies Essay For a country to be considered a superpower, it must have prominent import/export trade capacity, command political power in the world (allies), sustain a powerful military, and provide a substantial a high Gross National Product. What is usually overlooked is how the microeconomics is affected in a highly positive manner by the harmonious balance of diversity and unity within the successful countries that are operation so proficiently. The inner-workings and confluence between the cultures of any high ranking country are most probably functioning in a well defined rhythm. If there is a glitch in the smallest cog of the machine of any country it can usually be traced back to unrest in the social balance of diversity and unity, which results in the decline of a country’s economic success. A very crucial balance between unity and diversity within society is not an easy goal to achieve. Finding the perfect balance between any two principles can be an extremely difficult task, if not impossible. In this difficult search we look back in history to feudal China, where the philosophy of yin and yang were created. Svebor Hlede, an expert on the history of Chinese philosophy states that â€Å"The dual concepts of yin and yang which describe two primal opposing but complementary principles or cosmic forces said to be found in all non-static objects and processes in the universe† (Hlede). This seemingly paradoxical concept is the very nature of unity and diversity. Unity and diversity are two contradictory philosophies which must work in unison to allow a society to stray away from stagnation and stasis. When looking at the yin and yang circle, two parts which will represent unity and diversity are put together in a circle. This circle represents society as a whole, the two parts are contradicting aspects, they fight and interchange each other. Whenever the trend of unity increases, the trend of diversity decreases and so on. (Hlede) Abraham Lincoln, the si xteenth president of the United States, said â€Å"United we stand, divided we fall,† he was discussing the north/south cultural differences that brought on the Civil War. This concept of the absolute importance is appropriately valid in modern times to this day. One cannot survive on one’s own; therefore life is based upon and requires unity. Agreeing that unity is a principle building block in the base of a successful nation does not mean that the whole world follows this logic. For some, violence between cultures is such an ingrained tradition that balances between unity and diversity seems an improbable goal. It is the unfortunate truth â€Å"that when certain people in power try to promote unity within nations/countries, other certain people in power will do and say something that will cause disunity, which brings about war and all other types of evil things† (Thoughtz). For example, the current president of Iran invites aggravation when he states that the Holocaust did not happen. In another speech he advises the state of Israel should be wiped out. The condition of the Middle East is a proper example of no unity or acceptance of diversity. There is ongoing tension between the Israelis and its surround neighbors the bordering Arab countries. If one tries to promote unity in the Middle East, it is easily pushed aside when such an inflammatory statement is made by the president of Iran; this causes a tremendous uproar because the Holocaust did happen. Even in America there can be seen a sway in the balance of race relation and race unity. Racism is still happening in the US and also discrimination. Although progress has been made in the last half a century that unity can be disrupted when a racist incident occurs like the Jena 6 case. Racism is a leach on the social structure that keeps sucking away whatever unity seems to be gained.

Causes of income inequality in the UK and evaluate the measures that Essay

Causes of income inequality in the UK and evaluate the measures that could be used by the UK government to achieve a more equal distribution of wealth - Essay Example and Scott, G., 2012). The same cannot be said for high manual labor demanding jobs characterized by unpredictable shortages of skilled manpower. These have higher individual income rates than high growth rate jobs. The service sector in the UK which demands for low-skill and has limited trade union cover is the worst in terms of worker remunerations. The sector is often characterized by employment insecurity and unclear job descriptions which vary depending on the market demand, employers’ unique needs as well as personal pressures/ stress/ problems. The effect of globalization has seen an influx of high-skill jobs especially in high growth industries. Persons with unique skills are increasingly getting well paid than witnessed in previous years. Academic exposure has also defined the industrial/ job variations with professionals being scaled depending on their levels of education (Mooney, G. and Scott, G., 2012). This is the main factor determining labor as skilled, un-skille d, manual, automated, permanent, contractual and casual, among other classifications within the United Kingdom. State benefits including unemployment income and benefits from the state welfare are critical in the United Kingdom individual income disparities. This is because the state benefits are directly connected to the prevailing retail prices within the economy and not in any way indexed to the earnings of individuals (Eibel, D., Rockika, E., and Leaman, J., 2013). This explains why relative incomes of people who are state benefit oriented decreases over time. This factor has defined the inflation effect on large families surviving on minimum wage as well as households’ dependant on pension. The third factor in unequal income distribution is unemployment. This affects income distribution in both the short-run and long-run. In the long-run it affects education, quality of labour as well

Customer Satisfaction and Market Segmentation of Mass Transit Railway Dissertation

Customer Satisfaction and Market Segmentation of Mass Transit Railway (MTR) Corporation Limited - Dissertation Example The research has played an important role in highlighting the importance and need of customer satisfaction in the success and growth of the organsiation. The researcher had always an interest in understanding the dynamics of marketing and strategic management and the research offered an opportunity to learn different intricacies of the subject matter. While conducting the research, there were moments when the whole idea of achieving the proposed aim and objectives was looking far away. However, with due support of professors, friends and family, there was a new way that helped in gaining confidence of learning new things. It was really nice to interact with a number of people and analysing their views and opinions on customer satisfaction. Customer satisfaction is an abstract concept that requires thorough understanding of the nature and preference of customers. The researcher learnt a lot by analysing the views and opinions of customers that were very similar to the literature. An u nderstanding over the different facets of the research allowed the researcher to look things from different angles and perspectives and this learning has been pretty useful that can be incorporated in the personal and professional life. Every research is a kind of journey that adds great value. The researcher has been lucky enough to learn patience, understanding and analysis of things and opinions from different perspectives and angles. ... NT Knowledge is in the end based on acknowledgement- Ludwig Wittgenstein Every research starts with a general idea that gets depth and value with the support and guidance of others. Knowledge is doubled when share and supported in a compassionate manner. The researcher would like to thank his supervisor†¦ for his kind support and positive motivation that helped in achieving the proposed aim and objectives of the research. His continuous guidance created good amount of interest that has been reflected in the research. The researcher would also like to thank his professor†¦ for offering him key insights over the subject matter. Without his guidance and efforts, things would have been a bit different in terms of results and outcomes. The researcher would like to appreciate the management of the University that allowed him to access library and other electronic sources that helped in gaining knowledge over the subject matter. More importantly, this created a positive response f rom the researcher side in terms of delivering the goods in an expected manner. The role of family in supporting the research cause has been immense and without their support and motivation; things would have not shaped in a desired manner. Their understanding and constant support allowed the researcher to add continuous value to the research topic. The researcher would also like to thank his friends for sharing their ideas and views over the research topic that helped in developing multiple perspectives. Overall, a deep gratitude to everyone who made this research journey a successful one. The researcher would like to thank everyone for their direct and indirect support and dedicate the entire effort to their support and motivation. Their presence and guidance helped in identifying various issues

Michele Moody-Adams argues that moral progress is possible Essay

Michele Moody-Adams argues that moral progress is possible - Essay Example The Concept of Moral Progress Throughout History Considering the evolution of morality throughout the historical process, it should be emphasized that moral progress can be traced only from the instance the human life gained its uppermost value. This instance came with the Renaissance period in Europe. The Renaissance Humanism is featured with the appearance of the specific behavior codex that can be regarded as the initial step of the moral progress. This codex involved refusal from slavery, admiration for the human body and soul, human rights protection, and so on. The next step of the moral evolution of the humankind is the post World War I period. The global society became obsessed with the issues of war prevention and conflict resolving on a world scale, and the foundation of The League of Nations, as the global arbiter can be regarded as the further moral growth of the humanity. The further assimilation of the moral progress, discussed by Moody-Adams (259) is the result of the post World War II morality expansion: democratic movements, the wars for independence are the key aspects of the further morality assimilation, and moral progress throughout the world. Moral Progress In defining moral progress as a global perspective, the necessity of defining some common moral standard is crucial. Particular arbitrary decisions, needed for judging morality, have to be developed in accordance with the moral progress principles, such as: 1. Equality 2. Justice 3. Righteousness However, different moral groups cannot be included into a single judgment system otherwise dominant society will declare and impose its own moral system on the other weaker one, which exceeds the morality requirements. In the light of this statement, it should be emphasized that creation of the global arbitrary organizations cannot resolve moral conflicts, and creates the hierarchically arranged global society, where Superpowers declare their own values and moral standards for subdominant gover nments and societies. This originates the silence concept offered by Fricker (287). Considering the fact that cultural relativism offers the clear definitions of right and wrong, these definitions can be relevant and righteous only within the society that originated these definitions. Therefore, in the given circumstances of the global arbitration, the moral progress is featured with the local character mainly (Moody-Adams, 258). Moreover, if the morality values system of the â€Å"convicted† society contradicts the morality system of the global arbiter, the institutional prejudice is inevitable (Fricker 291) In general, the dialogic morality is almost meaningless without the basic persuasion that the humanity is constantly moving to greater equality, compassion, and justice. Nevertheless, the skepticism among scientists is enormous, since hierarchically arranged societies are not featured with high virtues. Nevertheless, the very fact that these societies are based on the le gislative activity signifies that such a progress has to be pursued. The evident logical contradiction in cognitive and moral relativism can be enunciated with the following question: considering the fact that all the members of the given society are ethnocentric, does this mean that cultural relativism is one of the forms of ethnocentrism? Moreover, cultural relativis

Implementating magnet environment in Riyadh Military Hospital ICU unit Essay

Implementating magnet environment in Riyadh Military Hospital ICU unit - Essay Example The process of magnet environment in magnet hospitals begins from the process of recruitment and continues with the process of retention. In the process of recruitment, a considerable number of measures are put in place and taken into account in order to ensure the attainment of recruitment objectives. In which candidates current and future expectations are taken into account. After recruiting, many efforts are consumed to retain the hired nurses. Needless to say, it is the ultimate objective of the recruitment of nurses to ensure their continual nursing services with a quite foreseeable future with the management of hospital. More significantly, numerous factors are taken into that require their attainment at recruitment and retention of nurses. However, Shortell & Kaluzny (2006) provide some fundamental elements essential to magnet environment within hospitals; they include, quality of nursing and leadership, organisational performance, motivation and worker autonomy, work design, effective groups and teams, coordination and communication, participative or decentralized management, and organizational change and organizational innovation. The nursing profession consists of three types of workers: registered nurses, nurse aides, and licensed practical nurses (General Accounting Office, 2001). Registered nurses, who are state-licensed and possess associate degrees (two-year community colleges), diplomas (three-year hospital programs), or baccalaureate degrees (four-year colleges), provide direct patient care besides managing nursing care (Keenan, & Kennedy, 2003). Nurse aides may provide their health care services in hospitals and home care settings as well, but... This paper talks also about a few things. One of them is attrition, which is not only a problem for hospitals but also for the managers, health policy makers, and managers relevant to the field of nursing. Besides increasing cost burden over the hospital management to renew the hiring process in order to fill the gap created by attrition of nurses. Interestingly, not only in the developed countries, where the health industry is considerably advanced and stable than health industry operating in the developing countries. Throughout the essay, we can see profound infromation on magnet environment and types of nurses, where it's discussed how important quality of nursing and leadership, organisational performance, motivation and worker autonomy, work design, effective groups and teams, coordination and communication, participative or decentralized management, and organizational change and organizational innovation are. Then the essay begins discussing the causes of nurse attrition, where the general perception of nurse is less positive. Afterwards, the paper talks about the effective strategies to increase nurse retention. This essay has a conclusion, which states that magnet environment holds a key to retain nurses. And, the magnet environment occurs when all the elements inside an organisation work in the required way; In which, organisational commitment, nurse leadership, recruitment policies and procedures, and enablement of nurses in the required level of decision making.

Organizational Behavior & Leadership Essay Example | Topics and Well Written Essays - 250 words

Organizational Behavior & Leadership - Essay Example The other feature is that these leaders promise rewards as a way of motivation for a desired performance (Schein, 2010). Contrary to transactional leadership, transformational leadership is proactive and always forms new expectations in surbodinates.Leaders also have good visioning abilty, manegement and rhetorical skills and develop strong bonds with the followers. These kinds of leaders inspire subordinates to work for goals going beyond self interest. On the other hand the level five leadership qualities which have been mainly exhibited by leader A includes, self confidence, humility and modesty and unwavering resolve in them. They directly participate in work and gives credit to others for their achievements. To them, success is not attributed to personal might but good luck (Schein, 2010). Leader B to a larger extent identifies with transactional style of leadership. He puts great focus on rewards for tasks successfully accomplished. The visioning aspect he portrays in his leadership style is an influence from the outgoing Chief Executive Office which he is likely to shade off when he takes over. One demerit to his kind of leadership to employees is that this type of leader may become unpredictable and instill fear of being held hostage for their actions. His subordinates feel less motivated to go beyond self interest.Surbodinates feel some sense of freedom when this leader is away and they fear taking up new challenges for fear of the consequences if at all they

Assignment #27 Essay Example | Topics and Well Written Essays - 750 words

Assignment #27 - Essay Example On the contrary, the civil population is deliberately kept ignorant of the internal issues of law and its executive and judicial aspects. Even as the police publicize the revolts within the cultural matrix of a close society, the exhibit clear double standards as the misdeeds of many police officers like Fuhrman are covered up at any cost. Simpson raises questions regarding the integrity of system of democratic government as it quite often keeps the general public in the dark regarding the political dynamics of the country and its inherent corrupting forces of power. He concludes that a society which is quick on punishing the minorities for the slightest offence should show the same amount of diligence when it comes to the police officers who abuse the minorities. Otherwise, the increasing cases against the minorities can be the result of such policemen with racist outlooks patrolling the streets of Los Angeles. 3. Simpson’s premises are both subjective and objective. He refers to his individual case where the police leaked false information to sway public opinion against him. But they showed dual standards when they hid the two lawsuits against Fuhrman and allowed his promotions to take place amidst the serious charges against him. On the objective front, Simpson argues that it is not fair to let a police officer like Fuhrman to continue in the department, not to speak of promotions, when charges of misconduct against him remain unproven. He also talks of a recent outrage by women’s groups that forced the department to identify those police officers who were guilty of domestic violence. This reveals the shocking amount to which policemen are susceptible to crimes against the concept of human rights. Under these premises, Simpson argues for a fairer stance by the legal system towards the LAPD. 4. The author’s individual conviction and moral values related to an equal

Summary Research Paper Example | Topics and Well Written Essays - 1500 words

Summary - Research Paper Example The nature of a designer personality has been understood in a variety of contexts. Broadly speaking, it’s understood that designer personalities constitute personalities or behavioral patterns that are ‘treated’ through a variety of pharmacological options. The late 20th century witnessed an explosion in this realm of health care. Still, it’s noted that, â€Å"the idea that personality is mediated by biological chemicals is not new; it dates back to Hippocrates and the ancient Greeks† (Carson 2008). Today, however, a myriad of personality characteristics are treated through pharmaceutical options. Such treatments began with chemical responses to such severe mental disorders such as schizophrenia. Chemical treatment for severe dysfunctioning soon gave way to chemical options for a variety of elements of personality. In these regards, pharmaceutical options exist prominently for the treatment of depression and anxiety symptoms, with Prozac and Zoloft, being among the most prominently prescribed drugs (Baghai & Rupprecht 2006). In addition to depression and anxiety, traits such as attention-deficit disorder are regularly treated through chemicals. There are a variety of advantages and disadvantages to the modern tendency towards ‘designer personalities’. Obvious advantages can be witnessed in individuals who contain severely debilitating personality disorders. For instance, it would be impossible for many individuals with schizophrenia, bi-polar disorder, or severe social anxiety to function without the aid of chemical intervention. Still, it’s clear there are a number of disadvantages. Perhaps the most prominent negative aspects of this occur with the glut of children diagnosed with attention-deficit disorder. Rather than restructuring the education system to adapt to the students, society has attempted to re-wire human consciousness. Another concern is that diversity of personality is an important part of a c reative and innovative culture. In simply medicating society to a perceived ideal, important and unique personality characteristics are being eliminated. In conclusion, this essay has examined what are termed ‘designer personalities’. In this context of understanding, it’s revealed that designer personalities are already a prevalent part of the contemporary cultural climate, as individuals are readily medicated for depression, anxiety, and a variety of personality ‘shortcomings’. Ultimately, while there are advantages for individuals with severe dysfunction, the disadvantages are the threat of a monotone culture. References Baghai TC, Moller HJ, Rupprecht R (2006). "Recent progress in pharmacological and non-pharmacological treatment options of major depression". Curr. Pharm. Des. 12 (4): 503–15. Carson, S. (2008). "designer" personalities . Retrieved from http://www.psychologytoday.com/blog/life-art/200807/designer- personalities 2. One of th e largest-scale scientific undertakings in recent years has been the human genome project. The Human Genome Project is a multinational effort to identify and map the approximately 20,000 – 25,000 genes of the human genome (McElheny 2010). The project was launched in 1990 and in 2000 a working draft of the genome was announced (McElheny 2010). 2003 witnessed the development of a complete draft of the human genom

Theories of Learning Essay Example for Free

Theories of Learning Essay Fill in the following boxes by defining Elemental and Holistic Models of Development. Then you will describe 2 theories, including theorist (s) from each model of development. Finally you will list the important points derived from each model learning theory. Save this document and type directly onto the document and into the boxes. The boxes will expand to accommodate what you write. Submit as an attachment to the appropriate drop box. ModelDefinition of each Model Learning TheoryTheory and Theorist 1Theory and Theorist 2Important Points Derived (Be sure to number these theories and double space between them for easy reading). Elemental Model Learning TheoryRepresents the universe as a machine composed of discrete pieces operating in a spatio-temporal field: reactive and adaptive model of man. Connectionism Edward L. Thorndike Classical Conditioning Ivan PavlovConnectionism: 1.Law of readiness – circumstances where a learner tends to be satisfied or annoyed, to welcome or reject. 2.Law of exercise – strengthening of connects with practice 3.Law of effect – strengthening or weakening of a connection as a result of its consequences. Classical Conditioning: 1.Reinforcement – conditioned reflex becomes fixed by providing the conditioned stimulus and following it repeatedly with unconditioned stimulus and response at timed intervals. 2.Extinction – Occurs when the reinforcement is discontinued and the conditioned stimulus is presented alone. 3.Generalization – conditioned reflex evoked to one stimulus and can be enticed by another stimulus dis-similar to the first. 4.Differentiation – initial generalization is overcome by method of contrasts where one stimuli is reinforced and the other is not. Holistic Model learning TheoriesRepresents the world as a unitary interactive, developing organism: active and adaptive model of man. Functionalism John Dewey Purposive Behaviorism Edward TolmanFunctionalism: 1.The functionalist is tolerant but critical 2.The functionalist prefers continuities over discontinuities or typologies. 3.The functionalist is an experimentalist. 4.The functionalist is biased toward associationism and environmentalism. Purposive Behaviorism: 1.The law of proximity – parts of a stimulus pattern that are close together or near each other tend to be perceived in groups; therefore, the proximity of the parts in time and space affects the learners organization of the field. 2.Law of similarity and familiarity – objects similar in form, shape, color or size tend to be grouped in perception; familiarity with an object facilities the establishing of a figure-ground pattern. 3.Law of closure – learners try to achieve a satisfying endstate of equilibrium; incomplete shapes, missing parts, and gaps in information are filled in by the perceiver. 4.Law of continuation – organization in perception tends to occur in such a manner that a straight line appears to continue as a straight line, a part circle as a circle, and a three-sided square as a complete square.

The quantity of pennies Essay Example for Free

The quantity of pennies Essay (1) Draw an indifference curve map with the quantity of pennies are on the horizontal axis and the quantity of nickels are on the vertical axis. Given the shape of your indifference curve, how would you describe the typical relationship between these two â€Å"products†? The two goods are perfect substitutes for each other. 5pennies are equivalent to a nickel. (2) You and I are in consumer equilibrium. CDs cost 10 dollars each and cassette tapes only 2 dollars each. I consume CDs and cassettes. You consume only cassettes. What can you infer about my MRS (marginal rate of substitution) of CDs and tapes? What about your MRS. Since both individuals are in consumer equilibrium, for you, the MRS should equal the price ratio since you consume both goods. Hence MRS = 10/2 = 5.  For me since I consume only cassettes at my equilibrium, it implies that I consider CD’s a neutral good. Therefore my indifference curves are horizontal (assuming CD’s are on the horizontal axis). Hence MRS is zero, since no amount of increase in CD’s can change your utility unless you have more cassettes. (3) The price of driving a car is 30 cents per mile. The cost of riding the bus is 60 cents per mile. At the moment, your Marginal Utility of the last mile of car transportation is 80 units, and the Marginal Utility of your last mile of bus transportation is 150 units. Are you maximizing your utility? Explain your answer. If I’m maximizing my utility then the marginal utility derived from the last cent spent on each good must be equal. The marginal utility from the last cent spent on driving a car is = 80/30 =8/3=2.67 The marginal utility from the last cent spent on riding the bus = 150/60 =5/2=2.5 Hence I’m not maximizing my utility. I can increase my  utility by spending less on bus rides and more on driving the car. (4) Let’s say your consumption basket is made up of two goods, â€Å"X† and â€Å"Y†. Your income is â€Å"I†. The market prices you face for these two goods are PX and PY. Draw an initial equilibrium point for your consumption of these two goods. (Restate the formula for the relation between your marginal rate of substitution and the market values of â€Å"X† and â€Å"Y† at the point of equilibrium.) Now, you suddenly crave good â€Å"X† much more relative to â€Å"Y† than previously. this do to your indifference curve and equilibrium position? Why? After you crave more â€Å"X† relative to â€Å"Y†, the price of â€Å"X† rises dramatically. your graph what does this do you your equilibrium position? Now, your income doubles. What does Draw on Graph your new equilibrium position. By doing this exercise, you get a sense of how your real income and purchasing power, and consumption changes, as your tastes, income and market conditions change. Remember there are three components here: Your psychological makeup – your indifference curve Your income – the result of all your hard work and application of skills The prices you face, determined by the market. In the â€Å"real world† this is a situation that will always hold true for you as you interact with the world of goods and services. At the equilibrium, the MRS=price ratio = PX/PY. At the equilibrium, the indifference curve is tangential to the budget line. MRS =MUX/MUY =PX/PY, i.e. MUX/PX = MUY/PY Now it is given that X is â€Å"craved† much more for relative to Y. Hence the indifference curves becomes steeper. That is now you are willing to give up more amount of Y to have a unit more of X. Alternatively, it can be said that you need more of Y to leave you indifferent for the same decrease in X. Hence the slope of the indifference curve, i.e. the marginal rate of substitution increases, i.e. MUx/MUY increases. We know that the price ratio doesn’t vary. Hence at the original equilibrium, we have MUX/PXMUY/PY. Therefore you will consume more of X and less of Y at the new equilibrium, since your receiving more from the last dollar spent on X than Y. Now the price of X rises. Since we are at an equilibrium, MUX/PX=MUY/PY. But since Px is higher, your budget curve pivots inward. With the substitution effect you consume less of X and more of Y. With the income effect you consume less of both goods (since real income has decreased). Therefore at the new equilibrium, you consume less of X and the amount of consumption of Y depends on the relative strength of the two effects. (5) Think of a commercial establishment (department store, coffee shop, gas station, store from which you make common purchases – that is spending your hard-earned money) and think through the questions in the previous exercise (4) as they would apply yourself and to the goods offered by this establishment. That is, take any two goods or groups of goods from the store you have chosen and re-do the questions in (4) as they would really apply to you and your tastes. Now you are thinking economics and thinking creatively as well! Consider choice made between having fruit beer(X) or having ice cream(Y) after dinnerassuming that both are good goods. At the equilibrium, the MRS=price ratio = PX/PY. At the equilibrium, the indifference curve is tangential to the budget line. MRS =MUX/MUY =PX/PY, i.e. MUX/PX = MUY/PY Now it is given that X(fruit beer) is â€Å"craved† much more for relative to Y(ice cream). Hence the indifference curves becomes steeper. That is now you are willing to give up more amount of Y to have a unit more of X.  Alternatively, it can be said that you need more of Y to leave you indifferent for the same decrease in X. Hence the slope of the indifference curve, i.e. the marginal rate of substitution increases, i.e. MUx/MUY increases. We know that the price ratio doesn’t vary. Hence at the original equilibrium, we have MUX/PXMUY/PY. Therefore you will consume more of X and less of Y at the new equilibrium, since your receiving more from the last dollar spent on X than Y. Now the price of X rises. Since we are at an equilibrium, MUX/PX=MUY/PY. But since Px is higher, your budget curve pivots inward. With the substitution effect you consume less of X and more of Y. With the income effect you consume less of both goods (since real income has decreased). Therefore at the new equilibrium, you consume less of X and the amount of consumption of Y depends on the relative strength of the two effects. (6) You are willing to accept risk for rewards. For example, you are willing to take real tough courses at UCD because if you do well, it will look like you are a hard worker on your transcript (and that is a good thing). Okay, the reward is what could be on your transcript but the risk is that you MAY pull down your GPA. Draw an indifference curve for your two â€Å"goods†, risk and reward for your decision to take or not take the hard courses. Put the good, reward, on the X axis. What do micro-economists call these two goods with respect to the indifference map? Now, suddenly you are really afraid to take the hard courses (that is, you now have a greater fear of failure). How does that change your indifference map? You have upward sloping indifference curves between risk and reward, i.e. for a given level of utility; if you face more risk then you require more rewards to keep you at that level of utility. You consider risk to be a bad good while reward to be a â€Å"good† good. Since you are afraid to take hard courses, you require more reward for taking the same risk to induce you to take that course. Hence the indifference curves become flatter. (7) The price of good X is $2. The price  of good Y is $6. You have income of $30. In the case where you prefer to consume X, what will your indifference map look like? Give a numeric example of how much of the two goods you will consume in equilibrium. What will be the ratio of the marginal utilities of these two goods? What exactly will be the level of your utility at equilibrium? At the equilibrium, your MRS equals the price ratio. Hence MRS=1/3. Consider the utility function, U(x,y) =xy. Hence MRS = y/x. At equilibrium, x=3y. The budget equation is 2x+6y=30. Hence at the equilibrium, 12y=30, i.e. y=2.5 and x=7.5. u(x,y) = 18.75. (8) Automobile bodies and automobile wheels are perfect complements. Normally, four wheels are consumed for each body purchased. Draw the typical consumer’s indifference map for these two goods, auto bodies, and auto wheels. What can you say about the point of equilibrium for the typical consumer of these two items? Indicate the point of equilibrium on the diagram for lower and higher levels of personal income. At the point of equilibrium, a consumer consumes only an integer amount of the two goods. He consumes x cars and the corresponding amount of wheels, i.e. (4*x) since you require 4 wheels for each car. Your equilibrium is at the point where the budget curve is tangent to the indifference curve, i.e. at the kink of the IC’s. Suppose a person has income sufficient to buy only one car. The his equilibrium point is at L. Compared to this a relatively higher income level individual will consume more number of cars, say like point H at his equilibrium. (9) With respect to three goods – ice cream, green tea, and digital cameras, what does it means when your preference for, and satisfaction gained from, these three goods are consistent with the assumptions of completeness, transitivity, and (what I call) the â€Å"pig theory† of demand. When preferences are said to be complete, it implies that you can rank the three goods in terms of your preferences between them. It can never be the case that you don’t know your preference ranking between two goods. When your preferences are said to be transitive then if you prefer x to y and then y to z, then it must be the case that you prefer x to z. If not then your preferences violate transitivity. If preferences satisfy completeness and transitivity then as the price of the good increases the demand for the good falls. This is the pig theory of demand. (10) What does it mean when we say that the MRS is A NEGTIVE VALUE on the indifference curve? Indifference curves are downward sloping and the level of utility is constant along an indifference curve. As you give up some unit of the good on X axis, say X, you need more of the good on Y axis, say Y, to keep your utility level constant. Hence the slope of the indifference curve, which is the MRS, i.e. the ratio in which you are will to substitute one good for the other while remaining at the same level of utility, is negative. It is negative since as the amount of X decreases, Y has to increase. (11) If your equilibrium point between two goods X and Y is a CORNER SOLUTION, and you are on the X axis, what does that indicate about the relation between your personal MRS between X and Y and the market determined price ratio Px/Py? Why is this a corner solution? In case of corner solution, at the equilibrium the price ratio and the MRS are not equal, unlike in the case of an interior solution. Since you are on X axis and hence consuming only X and zero amount of Y, the MRS =∞, i.e. no amount of Y can increase your utility level for the given level of X. (12) If your equilibrium point between two goods X and Y is a CORNER SOLUTION, and you are on the Y axis, what does that indicate about the relation between your personal MRS between X and Y and the market determined price ratio Px/Py? Why is this a corner solution? In case of corner solution, at the equilibrium the price ratio and the MRS are not equal, unlike in the case of an interior solution. Since you are on Y axis and hence consuming only Y and zero amount of X, the MRS =0, i.e. no amount of X can increase your utility level for the given level of Y. (13)How might an indifference curve map indicate your personal preferences if you believe in the following: Coke is just as good as Pepsi You consider Pepsi and Coke to be perfect substitutes for each other and hence your indifference curves will be straight lines. I hate rainy days and just love sunny days. You consider rainy days to be bad goods. Given rainy days is on the vertical axis and sunny days are on the horizontal axis, your indifference curves are upward sloping with utility increasing along the horizontal axis. Compared to everything else I could possible buy, I absolutely, positively want an Audi tt sports car. Having an Audi is your satiation point or your bliss point. Hence your indifference curve are concentric circles around this point. Baskin-Robbins Jamoca Almond Fudge ® ice cream is so addictive. flavor is absolutely huge!. My craving for this If the fudge ice cream is on the horizontal axis, then your indifference curves are relatively steep, i.e. you are willing to give up the ice cream only if you receive relatively large amounts of the other goods in compensation. I like ice cream, but under very few circumstances will I eat yoghurt. You consume ice cream and yoghurt in a particular combination. Hence these two goods are considered as perfect complements of each other but with greater weight on ice creams. Therefore your indifference curves are L shaped. (14) Draw an indifference map where at your point of consumption your MRS between X and Y is 3 and the price of X is $1.00 and the price of Y is $1.00. Is there anything you can do to raise your level of satisfaction? If so, what is it? If increasing your utility is possible, where do you want to  end up on the diagram and why? The MRS =3 while the price ratio is =1. Hence you are not at the optimum. At the utility maximizing point we require MRS=PX/PY. i.e. MRS=MUx/MUy = PX/PY, i.e. MUx/Px=MUy/Py. In this case we have, MUx/Px=3 while MUy/Py =1. Hence you are getting more utility from the last dollar spent on X than from Y. Therefore you can increase your utility by consuming more X and less Y. (15) Draw an indifference map where at your point of consumption your MRS between X and Y is 1 and the price of X is $3.00 and the price of Y is $1.00. Is there anything you can do to raise your level of satisfaction? If so, what is it? If increasing your utility is possible, where do you want to end up on the diagram and why? The MRS =1 while the price ratio is =3. Hence you are not at the optimum. At the utility maximizing point we require MRS=PX/PY. i.e. MRS=MUx/MUy = PX/PY, i.e. MUx/Px=MUy/Py. In this case we have, MUx/Px=1/3 while MUy/Py =1. Hence you are getting more utility from the last dollar spent on Y than from X. Therefore you can increase your utility by consuming more Y and less X.  (16) The Addictive Foods Corporation wants you do purchase and eat as much of its possible as is humanly possible. So Addictive Foods designs a pricing strategy to encourage this result. Given your own utility preferences for products of the type marketed and sold by Addictive, what is the likely shape of your budget constraint? Where might you end up on this constraint? If the pricing campaign is totally successful, where might most people end up on the constraint? The budget constraint is likely to be relatively flat (assuming food is on the horizontal axis) since Addictive Foods Corporation would charge a  relatively lower price. Given your preferences, you are likely to end up consuming relatively large amounts of food. If the pricing strategy is successful most people would end up to the right of the midpoint of their budget constraint, i.e. they would consume relatively large amounts of food. (17) The Greenie Energy Corporation wants you to conserve your household energy use – electricity and gas. So Greenie designs a pricing strategy to encourage this result. Given your own utility preferences for the energy marketed and sold by Greenie, what is the likely shape of your budget constraint? Where might you end up on this constraint? If the pricing campaign is totally successful, where might most people end up on the constraint? The budget constraint is likely to be steep (assuming that energy is on the horizontal axis). Greenie Energy Corporation would charge a relatively high price to discourage usage of  energy. Given your preferences, you are likely to end up consuming relatively small amounts of energy. If the pricing strategy is successful most people would end up to the left of the midpoint of their budget constraint, i.e. they would consume relatively small amounts of energy. HW 2. (1) What does â€Å"homogeneity† of demand mean? If the prices of all goods rises by 10% and you get a 10% income raise, what happens to your â€Å"real† income and purchasing power. If you were to represent this situation on an indifference map as you consumed goods X and Y, how would you show it? Homogeneity of demand is x(p,m) = x(ap,am), i.e. as income and prices increase by same proportion, the demand remains unchanged. If the prices of all goods rise by 10% and income increases by 10%, then your real income and purchasing power remains unchanged. On the indifference map you remain at your initial equilibrium. (2) You consume two goods, X and Y. You really prefer X to Y. Also for you Y is an Inferior good. X is a Normal good. Starting from an initial position of equilibrium, you face a sudden rise in income. Go re-establish a new equilibrium. How would you represent all of this on your indifference map? As your income increases, given that Y is inferior, you will consume less of Y and more of X. You move to a higher indifference curve and hence attain more utility since the budget set has expanded. (3) You are in equilibrium on your indifference map with respect to X and Y. Your income does not change, but the price of X falls. You move to a new point of equilibrium on the indifference map. Show: Where you end up if both X and Y are normal goods. Where you end up if X is normal and Y is inferior. Where you end up if X is inferior and Y is normal. Now: Show the impact of the income and substitution effects with respect to your consumption of the good X in each of the three cases. Are the substitution effects different in each of these three two cases? As the price of X falls you will consume more and X and less of Y under the substitution effect. This holds across the three cases.  In case of X and Y being normal goods, a fall in the price of X increases your real income and hence with the income effect you consume more of both X and Y. At the new equilibrium you will consume more X and the amount of Y consumed depends on the relative strengths of the substitution and income effects. In case of X being normal and Y being an inferior good, a fall in the price of X increases your real income and hence with the income effect you consume more of X and less of Y. At the new equilibrium you will consume more X and the amount of Y consumed falls. In case of X being an inferior good and Y being a normal good, a fall in the price of X increases your real income and hence with the income effect you consume less of X and more of Y. At the new equilibrium your consumption of X and Y depends on the relative strengths of the substitution and income effects. For instance, if the substitution effect is stronger then you will consume more X and less Y. (4) What is a Giffen Paradox? If the good X is subject to a Giffen Paradox, show with indifference curve, how you would respond to a sudden rise in the price of X. Show the income and substitution effects with respect to your consumption of X after the price rise. According to the Giffen paradox as the income increases, you consume less of the good. For a given rise in price of X, the substitution effect induces you to consume less of X and more of Y. Since your real income has reduced, the income effect induces to consume more X (by Giffen paradox) and the consumption of Y reduces. At the new equilibrium, the final consumption of X and Y depends on the relative strength of income and substitution effects. If the income effect is stronger, then you will consume more X and less of Y at the new equilibrium. (5) Using indifference curve analysis, show how a TAX on the consumption of the good X can be less satisfactory from a satisfaction standpoint (utility standpoint) than a tax that raises the equivalent amount of money on income. A tax on X changes the price ratio and budget curve pivots inward. Let e1 be the new equilibrium point. For an equivalent tax on income, the new budget line will pass through this point parallel to the original indifference curve. The indifference curve at the equilibrium e1 cuts the budget curve with tax on income. Hence you move to a new indifference curve which is tangential to the budget curve with income tax, with the new equilibrium lying to the right of e1 and hence on a higher indifference curve. (6) Using indifference curve analysis, show how a unit TAX on the consumption of the good X that is completely reimbursed back to the consumer can lead to less satisfaction than before, even when the entire tax amount is handed  back to the consumer. (7) You are in equilibrium on your indifference map in your consumption of X and Y. The price of X drops. Show where you might end up if X and Y were complement goods. Show where you might end up if X and Y demonstrated substitutability. In case of complementary goods, a fall in price of X results in increase in consumption of both X and Y in a given proportion (depends on the ratio in which you consume the two). In case of substitutes assume that the price ratio equals the MRS which implies that you are consuming positive amounts of both goods at your equilibrium. However once the price of X falls, it makes X relatively cheaper of the two goods and being perfect substitutes, you will spend your entire income on X and none of Y. (8) Here is a question that deals with the notion of exogenous variables and your ability to consume goods and services. Let’s say that you live on a Pacific Island with a bunch of other people. Let’s say as well is that your â€Å"profession† is to make and sell â€Å"wind kites†. This is a very desirable form of entertainment for the islanders. The market has determined the price of what you make (wind-kites), and the prices of all of the other things that you want to buy. You consume coffee and candy as goods X and Y. Your income is from the sale of wind-kites. You face two issues: First, you really want more coffee and candy than you can afford, and Second, some other people are out there also making wind-kites. So, what do you propose to do to raise your â€Å"income† (push out your budget constraint) in order to consume more of these two items that you really crave? How would you represent your successful efforts on a two-dimension graph? What if the price of coffee skyrockets? What happens to your graph? What happens to your consumption of coffee and candy if both are normal goods? What additional steps might you take to maintain your purchasing power over the goods you demand to consume? When it comes to your manufacture of wind-kites, can you think in what ways any accumulated knowledge and wisdom on the island (the past experience and  efforts of other people) helps you in your profession? Note: there are many possible answers to (8), but all follow a correct micro-economic logic. And this is an economic logic that we all face every day of our lives in the real world. I want to consume more coffee and candy but I am constrained by my budget. Hence to consume more of these goods I need to increase my budget, i.e. income and this can be done only by increasing profits from selling kites. One is to reduce the cost of manufacturing the kites which will in turn lead to higher profit margins on each unit of kite sold. Also there are others selling wind kites. To increase sales revenue, I can also lower my price, but this requires the demand for kites to be inelastic and my price cut should not be matched by the other kite sellers. If I can increase my income then I can consume more of the two goods and hence move to a higher indifference curve at the new equilibrium.  However if the price of coffee increases, then under the substitution effect I consume less of coffee and more candy. But my real income has fallen and thus the income effect induces me to reduce consumption of both goods. At the final equilibrium, I will consume less coffee. The relative consumption level of candy depends on the strength of substitution effect relative to the income effect. If I can make use of accumulated knowledge and wisdom on the island, then it will help lower my costs of production and thus increase my profit margin on each unit sold. (9) Simple, but important. What is the difference between a â€Å"shift in demand† (an increase or decrease in demand) and a â€Å"change in the quantity demanded†? What do these concepts have to do with endogenous and exogenous variables? A shift in demand implies movement along different demand curves. A demand curve shifts when an exogenous variable changes. A change in quantity demanded is a movement along the demand curve. A change  in demand occurs when the endogenous variable varies. (10) Now here is a challenge. If you can work through the answer to this problem and understand it, you will have an insight as to what can drive national economic and most especially foreign policy of a country like the United States. The GDP of the USA is almost 70% consumption of goods and services by individuals. It is desire and possibility to consume all these goods that provide incentives for businesses to  make the goods and therefore provide employment and income for hundreds of millions of people.  Just about all of the goods that we consume and use in the USA are made with petroleum (oil) as an input. Soap, plastics, machines, medicines, and (obviously) gasoline and diesel fuel are examples. Suppose we had an indifference curve that showed the relationship between the consumption of all oil and oil-based goods (X) and all other goods (Y) for all Americans. Show what would typically happen in terms of income effects, substitution effects, and welfare loss if the US suddenly faced a large rise in the price of imported oil. A large rise in the price of imported oil would make imports relatively expensive. Given that 70% of income is spent on imports, the increase in price of imports significantly reduces the purchasing power of income and you move to a lower indifference curve. Hence there is a large reduction in welfare. (11) An issue facing just about all consumers (ALL OF US) is that of trying to move out the budget constraint (increasing purchasing power through a rise in income). I admit, I want that too. Using indifference curve analysis, we see how movements in income can â€Å"compensate† for price changes. Let’s say you were faced with a rise in the general price level for the goods you desire to consume. How would this impact your position in the budget-constraint indifference curve diagram?  Now, remembering the diagram about earnings and wage-power that I put on the board in an early lecture, think of ways that you could try to remedy this situation, right now? Remember the three factors that will determine how  much purchasing power you will have over the goods and services that others in the community produce (should you WANT to consume them). What resources are there in the community that can help you solve this problem? (This is a very practical and real-life question that should make our ECN 100 theory more relevant to you.) A general rise in the price of goods would shift the budget constraint inward, i.e. your budget set contracts since the purchasing power reduces. This induces you to move to a lower indifference curve. The lower purchasing power can be compensated for by increasing the number of hours worked (i.e. by reducing leisure enjoyed). Alternatively, you can invest your income in inflation-indexed bonds which will prevent your purchasing power from decreasing. (12) Which of the two phrases that follow would indicate a demand curve moving vertically or horizontally?  An article that coffee is healthy results in people drinking more coffee at any price. An article that coffee is healthy results in people wanting to pay more for coffee no matter how much they drink.  The first article indicates a shift of the demand curve. The article induces people to change their tastes and hence consume more coffee at the same price. (13) If he price of coffee rises from $3 to $4 per pound and as a result you lower your consumption of coffee from 4 pounds per week to 3 pounds per week, what is your personal elasticity of demand for coffee? Is your demand elastic or inelastic at this point? The elasticity is given by e=(dQ/dP)/(P/Q) = -1*(3/4) =0.75. Your demand is inelastic at this point since ebagels purchased? What can Noah expect to happen to his total revenue earned after this price increase of the bagel? Why would a typical business desire a demand curve for its product that is as least elastic or as inelastic as possible? We can assume that the price elasticity for Noah’s Bagels is inelastic if it is less than 1. We can define price elasticity as, e= (% change in demand)/(%change in price). Since demand is inelastic, e If the price elasticity of demand is inelastic, then as the price increases, the total revenue will increase. If the price elasticity of demand is elastic, then as the price increases the total revenue falls. For unitary elastic demand, for changes in price, the total revenue remains unchanged. (16) If a linear demand curve has a slope of One, what is the value of the price elasticity of demand on this demand curve at its midpoint? What is the value of the price elasticity on the curve above the midpoint? Below the midpoint? For a linear demand curve of slope=1, we have dQ/dP=1. At the midpoint, P=Q. Hence e=(dQ/dP)/(P/Q) =1. For any point above the midpoint, PQ, thus e1 and for any point below the demand curve, P  changes for coffee, why is it that the demand curve would ALWAYS be downward sloping. Show how this demand curve would be determined using the indifference map and budget constraint diagram for a typical coffee consumer. The substitution effect induces the consumer to consume more of the relatively cheaper good. Hence as the price of a good increases you will substitute away from it. Hence the demand curve under the substitution effect is downward sloping. An increase in the price of X pivots the budget curve inwards around the vertical intercept. To capture the substitution effect, a new budget curve where the real income is held constant is defined. The initial equilibrium is at e0. For the budget curve to the right of e0 lies below the original budget curve and hence was already affordable. Hence the consumer will consume to the left of e0 under the new equilibrium. Hence as the price of X increases, the substitution effect induces the consumer to reduce the consumption of X. (19) Let’s say the commodity â€Å"X† is a Giffen Good. Using the indifference map and budget constraint for the typical consumer of this good, show how the combination of the substation and income effects results is an UPWARD SLOPING demand curve for â€Å"X†. For a given rise in price of X, the substitution effect induces you to consume less of X and more of Y. Since your real income has reduced, the income effect induces to consume more X (by Giffen paradox) and the consumption of Y reduces. At the new equilibrium, the final consumption of X and Y depends on the relative strength of income and substitution effects. If the income effect is stronger, then you will consume more X and less of Y at the new equilibrium. Hence as the price of X increases, you consume more of X and hence the demand curve is upward sloping. (20) This next question is related for (6) above and is repeated for emphasis. Your government wants you to consume less Coffee. It believes that the caffeine in coffee is harmful to your health. Thus, your government decides to place a tax on your purchase of coffee. Coffee is a NORMAL good.  This tax is a FIXED PERCENTAGE of the price (amount of money) you pay to this product. For every dollar you spend on coffee, you pay a â€Å"t† percent tax on that dollar. Therefore the more money you spend on coffee, the more tax you pay. BUT, your government feels sorry for you and decides to rebate back to you the tax you pay on the coffee that you purchase (all of it). With the rebate, you can do what you wish. Please use the tools we have developed thus far in the course to show: (1) The original consumer equilibrium before the tax and the impact of the tax on the budget line and the new consumer equilibrium after the imposition of the tax. (2) The impact of the tax rebate on the consumer and the new consumer equilibrium after the rebate. (3) How the new consumer equilibrium with the rebate leaves the consumer â€Å"worse off† than had the tax not been levied in the first place. Since you are moving to a lower indifference curve after the rebate, you are worse off under this system. (21) If potatoes are an inferior good, how would we show that to be the case using a simple calculation of the income elasticity of demand for potatoes? Income elasticity can be defines as, ei = (dQ/dI)/(I/Q). Since potatoes are inferior goods, as the income increases you consume less of it, i.e. (dQ/dI) Assuming that the demand is linear, i.e. it is a straight line joining (0,10) and (10,0), the consumer surplus for P=5 will be half the area of the triangle enclosed by the demand curve. Hence consumer surplus =  ½*[1/2*10*10] =$25. Consumer surplus on a unit sold is the difference between what the consumer is willing to pay for that less the amount he actually has to pay. Therefore the lower the price he has to actually pay relative to his willingness to pay, greater is his consumer surplus and hence greater the welfare.