Demand Analysis: Willingness to Pay and Elasticity

This lecture discusses the concept of demand through the lens of willingness to pay, using examples such as a natural park visit and the impact of price changes on consumer behavior. The instructor presents a table illustrating Paul's willingness to pay for park visits, analyzing how rational decisions are made based on entry ticket prices. The discussion extends to the elasticity of demand, particularly in the context of tobacco taxes in France, where price increases led to a significant decrease in cigarette sales. The instructor emphasizes the importance of understanding the reasons behind changes in demand, including the income effect and substitution effect. Graphical representations of demand shifts due to external factors, such as weather and insulation improvements, are also explored. The lecture concludes with practical exercises involving the demand for photovoltaic panels, highlighting how price influences consumer choices and total market demand. Overall, the session provides a comprehensive overview of demand theory and its real-world applications.