የ10ኛ ክፍል ኢኮኖሚክስ

በአማረኛ እና በእንግሊዝኛ
Unit 1: Theory of Consumer Behaviour
1.1 The Concept of Utility
1.2 The Cardinal Utility Theory
1.3 The Consumer Maximization Problem
1.4 Introduction to the Ordinal Utility Theory
Unit Summary
Unit Review Exercises
Unit 2: Theories of Demand and Supply
2.1 Theory of Demand
2.2 Theory of Supply
2.3 Market Equilibrium
2.4 Elasticities of Demand and Supply
Unit Summary
Unit Review Exercises
Unit 3: Theories of Production and Cost
3.1 Theory of Production
3.2 Theory of Cost
Unit Summary
Unit Review Exercises
Unit 4: Market Structure
4.1 Perfectly Competitive Markets
4.2 Pure Monopoly Market
4.3 Monopolistically Competitive Market
4.4 Oligopoly Market
Unit Summary
Unit Review Exercises
Unit 5: Banking and Finance
5.1 Introduction to Financial Intermediaries
5.2 Introduction to Financial Markets
5.3 Introduction to Financial Institutions
5.4 Historical Development of Banks in Ethiopia
5.5 Micro-finance Institutions
5.6 Electronic Banking (e-banking)
5.7 Indigenous Financial Institutions
Unit Summary
Unit Review Exercises
Unit 6: Economic Growth
6.1 Review of Macroeconomic Variables
6.2 Definition and Measurement of Economic Growth
6.3 Sources of Economic Growth
6.4 The Weaknesses of Using GDP /GDP Per Capita
6.5 The Business Cycle and Its Phases
Unit Summary
Unit Review Exercises
Unit 7: The Ethiopian Economy
7.1 Components of Gross Domestic Product (GDP)
7.2 Real GDP Vs Nominal GDP
7.3 The Agricultural Sector in the Ethiopian Economy
7.4 The Industrial Sector in the Ethiopian Economy
7.5 The Service Sector in the Ethiopian Economy
7.6 Agriculture versus Industrial Development
Unit Summary
Unit Review Exercises
Unit 8:Business Startups and Innovation
8.1 Innovation
8.2 Business Startups
8.3 Types of Businesses Organizations
8.4 Business Feasibility Analysis
Unit Summary
Unit Review Exercises
Thank You
• Unit Introduction
• A consumer is a decision making unit (an individual or a
household) who uses or consumes a commodity or service.
• The theory of consumer behavior is concerned with how
a consumer decides on the basket of goods and services he/she
consumes in order to maximize his/her satisfaction.
• In this unit, we will discuss how the consumer decides to spend
his/ her income on different goods.
 Cont.
• The theory of consumer behavior, set out with the following
important assumptions;
• The consumer has a limited income.
• The consumer is assumed to be rational. Given the consumer’s
income and the market prices of the commodities, he/she spends
the income on goods and services that give the highest possible
satisfaction or utility.
• The consumer has relevant information to make a decision (is
aware of his or her income, and is aware of the commodities
available and their prices).
Main Contents
1.1. The concept of utility
1.2. The cardinal utility theory
1.3. The consumer maximization problem
1.4. Introduction to the ordinal utility theory
1.1 The Concept of Utility

In our everyday lives, we buy different goods and services for

consumption. Utility is the level of satisfaction or pleasure derived from
the consumption of a good or service.
Thus, utility is the power of a commodity to satisfy human wants. For
example, bread has the power to satisfy hunger, while water quenches our
thirst.
In defining utility, it is important to bear in mind the following points:
• Relativity of Utility: The utility of a commodity is subjective to a
person’s needs. It is not absolute (objectively determined). The same
commodity provides different utilities to different consumers.
For example, non-smokers do not derive any utility from cigarettes.
 Cont.
• The utility of a product can be different at different places
and times. For example, the utility that we get from wearing
jackets during the cold season is not the same as during the hot
season.
• For the same consumer, utility varies from unit to unit, from
time to time, and from place to place. For example, the utility
we get from drinking tea early in the morning may be different
from the utility we get during lunchtime.
• ‘Utility’ and ‘usefulness’ are not synonymous: usefulness is
the concern of a product whereas utility is the concern of the
consumer.
Cont.
• Approaches to measuring Utility: Since utility is a
qualitative concept, it is difficult to measure quantitatively,
but economists try to quantify it in two different ways:
cardinal utility and ordinal utility.
 Cont.
• To get a higher level of satisfaction, the consumer must be able
to compare the utility of the various baskets of goods that can
be bought with the available income.
• According to Cardinal Utility theory, utility is measurable
like weight, height, and temperature, and they suggested a
unit of measurement of satisfaction called ‘utils’.
• The Cardinal School postulated that utility can be measured in
monetary units (i.e., by the amount of money that the
consumer is willing to pay for another unit of a commodity)
or by subjective units called ‘utils’.
• Thus, the school assumes that the level of utility can be
expressed in numbers.
 1.2.1. Assumptions of Cardinal Utility Theory
I. The consumer is Rational: The main objective of the consumer is to
maximize his/her satisfaction given his/her limited budget or income.
Thus, in order to maximize his/her satisfaction, the consumer has to be
rational.
II. Cardinal Utility: Utility is a cardinal concept, which means the
utility of each commodity is measurable, with the most convenient
measure being money.
III. Constant Marginal Utility of money: the utility that one derives
from each successive unit of money income remains constant.
IV. Diminishing Marginal Utility: The utility gained from the
successive units of a commodity diminishes. In other words, the
marginal utility of a commodity diminishes as the consumer consumes
larger quantities of it. This is the law of diminishing marginal utility.
Cont.

•V. The total utility of a basket of goods depends on the

quantities of the individual commodities. If there are n
commodities in the bundle with quantities X1, X2, X3,….Xn,
the total utility is given by TU = f (X1,X2, X3..……Xn).
1.2.2. Measurement of Utility (Total and Marginal Utility)
• Total Utility (TU): refers to the total amount of satisfaction a
consumer gets from consuming or possessing some specific
quantities of a commodity (X) at a particular time.
• As the consumer consumes more of a good (X) per time
period, his/her total utility increases.
• However, there is a saturation point for that commodity after
which the consumer will not be capable of enjoying any
greater satisfaction from it.
• Therefore, TUn refers to the total utility derived from
consuming n units of a commodity X.
Cont.
• Marginal Utility(MU): refers to the additional utility obtained
from consuming an additional unit of a commodity.
• In other words, marginal utility is the change in total utility
resulting from the consumption of one more unit of a product
per unit of time.
Mathematically, the formula for marginal utility is:
Cont.
• Suppose Beka gets 10 utils of total utility by consuming 2
quantities of orange, and his total utility increases to 12 utils
as he consumes 3 quantities of orange. Thus, consumption of
the 3rd quantity of orange has caused total utility to increase
by 2 utils (12 utils minus 10 utils). Therefore, the marginal
utility of the 3rd orange is 2 utils.