Demand curve & net utility

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Из курса от партнера Princeton University

Networks Illustrated: Principles without Calculus

39 оценки

Princeton University

Networks Illustrated: Principles without Calculus

39 оценки

What makes WiFi faster at home than at a coffee shop? How does Google order its search results from the trillions of webpages on the Internet? Why does Verizon charge $15 for every GB of data we use? Is it really true that we are connected in six social steps or less? These are just a few of the many intriguing questions we can ask about the social and technical networks that form integral parts of our daily lives. This course is about exploring the answers, using a language that anyone can understand. We will focus on fundamental principles like “sharing is hard”, “crowds are wise”, and “network of networks” that have guided the design and sustainability of today’s networks, and summarize the theories behind everything from the social connections we make on platforms like Facebook to the technology upon which these websites run. Unlike other networking courses, the mathematics included here are no more complicated than adding and multiplying numbers. While mathematical details are necessary to fully specify the algorithms and systems we investigate, they are not required to understand the main ideas. We use illustrations, analogies, and anecdotes about networks as pedagogical tools in lieu of detailed equations. Please note that per Princeton University policy, no certificates, credentials or reports are awarded in connection with this course.

Из урока

Pricing Data

Data makes up a significant part of our cell phone bills. How do cellular providers set these price points? In this lesson, we will see how so-called usage-based pricing schemes can send better signals than flat- rate, “buffet” schemes, leading to better sharing of the network.

Our mobile data plans4:13

Demand for data8:04

Jobs' Inequality of Capacity6:27

Usage-based plans6:31

Comparing pricing schemes6:35

Demand curve & net utility5:25

The Tragedy of the Commons9:24

Flat rate creates waste & favors heavy users10:11

Познакомьтесь с преподавателями

Christopher Brinton
Lecturer
Electrical Engineering
Mung Chiang
Professor
Electrical Engineering

So, why do users want to consume exactly at their demand curve?

Well, in order to understand this, we'll just logically consider two different

cases. And you'll see exactly at the end of

this, why it is that you want to consume exactly what your demand is.

so, first case, suppose we consume less than our demand.

So, on the demand curve right here, this price per unit.

So, suppose that you dro, you drop the quantity you consume down maybe to here.

So, it's below your demand curve now. Say okay, well, we're just going to

consume right at this quantity. Okay.

So, now if we draw this line up in here. We'll just draw all the way out to the

end. You'll just see in a second,

Now, the, the amount that you have to pay has now decreased, right?

So, because you're happened to have this quantity where you're down at this

quantity, right? So, at the same price per unit, you're

consuming less amount and the amount that you have to pay is going from this

quantity times this price per unit times whatever this quantity is times this

price per unit, right? So, the decrease is from here times here

to here times here. And so, it's really decreasing by this

area in here, right. This is the decrease, so, we can call

that B1, [INAUDIBLE]. But now that you're, you know, dropping

down the amount you're consuming, the utility is going to drop too, right.

So, the utility is also going to decrease in addition to the price decreasing.

So, you just saw the price decreases by B1.

And the utility though, remember the utility is everything to the right of the

demand curve. So, it's everything in this way, that's

the utility. So, the utility is going to drop by the

entire area in here. Right.

So, this entire area. That's how much the utility is going to

drop. So, it is we call this A1 can, with her

convetion before staying the same, the utility is going to increase, decrease by

A1 plus B1. So, if you remember the net utility was

the total utility minus the price. So, now we have on this one side total

utility minus the price that you're going to have to pay.

So, we want the price to be lower and the utility to be higher.

But the problem is that the utility is decreasing by A1 plus B1 and the price is

decreasing by only B1, right? So, we're actually losing now, so, I'll

write this as a negative A1 total here. So, we're actually going to have a lower

net utility than we could have had if we had stuck with just our quantity.

So, if we'd, if we'd consumed exactly at the quantity, we would have had an extra

A1 of utility. So, we've, we've just gone down.

Now, in second case we're going to consider is, what if we consumed more

than our demand. So, in the opposite sense now, okay,

well. Okay, now you've convinced me why I don't

want to decrease the quantity that I've purchased, because my utility is going to

go down. But what if we consume more than our

demand? Well, now okay.

So, say then, you increase the amount that you're going to consume up to here.

Okay. And I'll draw this line again, at this

pointer right, right over here. So, now, th, the the amount that you're

going to have to pay is increasing, right?

But remember, we're still at this price per unit, right?

So, the amount you're going to have to pay is this rectangle.

And this this price per unit, at this quantity, where to this is the amount

you're going to have pay. It just went up by this entire area in

here. That's how much it went up.

Okay? And so, we'll call this again, we'll call

this B2 this time, because it's not the same as B1.

And we'll call this A2 in here, this guy A2, B2 and A2.

So, your utility is increasing, oh, sorry, sorry, your price is increasing by

A2 plus B2, right. And now, your utility remember is

everything to the right of the demand curve, right?

So, you're, you're utility is this area in here, is B2.

Okay? So, your utility is going up by B2, and

your price is going up by A2 plus B2. Okay?

So, now, again you're losing out because your, your added utility is not

counteracting your added price. Right?

So, you're really losing out now if you do total utility minus price again.

You're going to have a negative outcome, right?

because you're going to be paying more, and it's going to be negative A2 in here.

So, again, you're losing. You're losing out, and in either case,

you see you're going to have a negative result, right?

So, you're going to lose money, basically.

You're or, not money necessarily, but we can quantify it all in terms of money.

But you're going to lose net utility. So your net utility is going to go down.

And so, therefore the conclusion is that the demand curve itself maximizes the net

utility. So, consuming exactly at your demand is

going to maximize the net utility. Okay.

because if you go lower, it's going to go down and if you go up, it's also going to

go down. So, demand curve is maximizing net

utility logically.

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