1. What are indifference curves? Explain the consumers’ equilibrium under the assumptions of ordinal approach. Utility of goods cannot be measured in terms of précised quantitative term. J. R. Hicks and R.G.D. Allen developed Indifference Curve analysis based on ordinal approach. Indifference curve (IC) is defined as the locus of point which show the different combination of two goods or commodities a consumer is indifferent about the point A or B or C or D. According to this analysis the consumer
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different circumstances using the labor-leisure model. As I am not actively looking for work in the labor market my indifference curve is so steep there are no tangencies to my reservation wage‚ which is defined as the “lowest wage rate at which a worker is willing to accept a job.” By dedicating all my time to studying and practise‚ and none to the labor force my indifference curve has no tangency to my constraint. As a rational person who wants to maximize utility; the current wage rate is not high
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| 5 | _____ | 0 | 6 | 45 | _____ | 7 | 35 | _____ | 8 | _____ | –15 | (a) Graph both the total utility and marginal utility curves together on the same graph. (b) Explain the shape of both of the curves. (c) Identify the point where utility is maximized on both curves. Discuss the reasoning behind each value. Q3 Show an indifference curve by using the data in the table below and indicating X on horizontal axis and Y on vertical axis. (3m) Combinations | Units of X
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additional hour in leisure rather than preparing food. c) (4 marks) Juanita chooses to spend one-quarter of her time in leisure. In the diagram in (a)‚ show that this is her optimal choice‚ and indicate the division of her time. Ans: need an indifference curve tangent to the budget line at leisure = 18/4 = 4.5. Remainder of time is spent in home production. Now suppose that Juanita is able to engage in paid employment as well as leisure and homework. Paid employment offers her a wage of $12 per hour;
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by creating as set of contour plots of DM’s implied utility function. Figure 1 plots a set of "indifference curves" assuming a utility function of U = X Y. FIGURE 1 U=X^1Y^1 100 U= 1 U= 8100 U= 6400 U= 4900 U= 3600 U= 2500 Y 60 80 40 U= 1600 U= 900 U= 400 U= 100 0 20 0 20 40 X 1 60 80 100 Marginal Rate of Substitution The slope of the indifference curve is called DM’s Marginal Rate of Substitution (MRS) and provides information with respect to tradeoff’s
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maintained without any compromise in taste. This resulted in a shift of the utility curve towards the right‚ whereby consumers got a higher level of satisfaction‚ by consuming products from a bigger brand which believed in far better hygienic procedures (Ref graph). With this in mind‚ they evolved a competitive pricing strategy to survive and grow in the market dominated by smaller players. INDIFFERENCE CURVE ANALYSIS Haldiram’s has a huge product portfolio and sought to customize its products
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For Monash University Students: If you have studied intermediate level microeconomics this will be easy reading. Please assist fellow students. Financial Markets bring together borrowers and lenders of funds. They bring aggregate saving into equality with aggregate investment. Consumers have different time preferences for their consumption. Producers use capital until its marginal revenue productivity equals its opportunity cost in interest charges. These are Paretian optimal solutions for welfare
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Consider the discussion in the article below on the pricing practices of online travel website Orbitz. Based on discussion and application of the relevant theoretical accounts on this type of pricing policies‚ (1) explain the microeconomic foundations for Orbitz actions‚ and (2) assess their likely sustainability in online retail markets. This essay with address the pricing policies carried out by Orbitz‚ going into detail about the microeconomic foundations for Orbitz actions. This will include
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1) Is the assumption that ‘more is better’ satisfied for both goods? 2) What is [pic] for this utility function? 3) Is the [pic] diminishing‚ constant‚ or increasing as the consumer substitutes [pic] for [pic] along an indifference curve? 2. (25 points) A consumer purchases two goods‚ food [pic] and clothing [pic]. Her utility function is given by [pic]. The price of food is [pic] ‚ the price of clothing is [pic]‚ and the consumer’s income is [pic]. 1) What is the
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summarizes the economic view of behavior and contrasts it with other views. The chapter presents a graphical analysis of utility maximization and decision making under uncertainty. The concepts in this chapter are an important foundation for subsequent material in the book. CHAPTER OUTLINE ECONOMIC BEHAVIOR: AN OVERVIEW Economic Choice Marginal Analysis Managerial Application: Marginal Analysis of Customer Profitability Opportunity Costs Managerial Application: Opportunity Costs and V-8 Creativity of
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