Show that the equilibrium condition and consumerequilibriumunder both cardinal and ordinalutilitytheory are identical.
They both assume that the consumer is rational.
Consumerequilibrium, undercardinalutilitytheory, is achieved when the sufficient condition is met. That is, the total...
ONSUMER EQUILIBRIUMCARDINAL AND ORDINAL
UNIT 5 CONSUMEREQUILIBRIUM:
CARDINAL AND ORDINAL
5.2 Cardinalutility approach to consumer behaviour
5.3 The law of eventual diminishing marginal utility
5.4 Consumer’s equilibrium
5.5 Basis of law...
Consumer Behaviour Theory- Ordinal Approach and Cardinal Approach
Total Utility, Marginal Utility, Relationship between Total Utility and Marginal Utility
Law of Diminishing Marginal UtilityUtility Analysis and ConsumerEquilibrium- One Good Case and Two Goods Case
Consumer- Who is a Consumer...
In this unit, we shall concentrates on a consumer by looking at the behaviour of a
consumer in exclusion from both other consumers and producers.
Recall that a consumer is one who uses goods and services to satisfy her wants. She is
assumed to be rational meaning...
1.0: INTRODUCTION (UTILITY)
Coca-Cola is an international brand that are consumed everyday all around the world. Statistic has shown that each day, more than 8 million can of Coca-Cola is being sold worldwide. However today we are not going to discuss about the secret behind Coca-Cola success. On...
(a) Discuss how microeconomic theory can help to explain the effects of lowering the minimum wage for teenage employees in the retail industry
(b) How is the usefulness of a theory evaluated
(c) “Observation without theory and theory without observation are equally useless in explaining...
1.0 CONSUMER DEMAND THEORY/ CONSUMER BEHAVIOR
Consumer behavior theory is concerned with how consumers make decisions about consumption given commodity price and their limited income so as to maximize utility.
WHO IS A CONSUMER?
A consumer is a decision making unit about consumption.
economics was limited to what is currently Micro-economics.
1.1 Economic Models;
Economic theory aims at the construction of models which describe the economic behavior of individual economic units;- consumers, firms, government agencies and their interactions hence creating the economic systems of...
the Average Revenue and Marginal Revenue from the table above are same under perfect market.
b) Two important characteristics of such a firm are firm sell identical product and cannot influence the market price.
c) The equilibrium output of this firm is at 2 units where Marginal Revenue equal to Marginal...
2. Theory of Demand
3. Demand Forecasting
4. Theory of Consumer’s Behavior
5. Supply Analysis
Q.1 Give an appropriate definition of Economics.
Ans.: The term economics is derived from two Greek words...
Market Equilibrium. Consumer Behaviour. Utility analysis: Cardinal and Ordinalutility, Equi-marginal utility. Indifference curve and its properties. ConsumerEquilibrium with Cardinal and Ordinal approach, Consumer surplus, Price, Income and Cross Elasticities of Demand. Production Theory: Production...
THE THEORY OF CONSUMER BEHAVIOR
• Derivation of Demand curve
• Marginal rate of Substitution
• Optimum Consumer
• Income Consumption
• Price Consumption Curve
• Elasticity of Demand
QN:A We all know that consumer is the one who uses goods and services to satisfy his/her wants.
She /he is assumed to be rational meaning that he/she earns at utility maximization, giving his/her income and commodity prices.
There several theories that have been developed to try and explain...
Marginal concept in economics.
Economics of information: Risk, Uncertainty, Asymmetry of information, Adverse Selection, Market Signaling.
The theory of firm; Econometric Models & Economic optimization.
of the use of economic models of thought to analyze business situations. Some writers consider managerial economics as the integration of economic theory with business practice for the purpose of facilitating decision-making and forward planning by management. The underlying idea of all these definitions...
significance Introduction and meaning : (Author : Dr. M.S. Khanchi) Business Economics, also called Managerial Economics, is the application of economic theory and methodology to business. Business involves decision-making. Decision making means the process of selecting one out of two or more alternative courses...
UtilityUtility is a theory in economics that measures the satisfaction one gains from consumer a good/product.
CardinalUtility Vs OrdinalUtilityCardinalUtility - measured in Utils
OrdinalUtility – according to preference
Law of Diminishing Marginal Utility
The more we have of a thing...
completion of this unit, students should be able to:
1. Demonstrate understanding of the fundamental methodology and principles of
Microeconomic theory and practice;
2. Comprehend and critically appraise economic decisions made by governments,
Businesses and households;
3. Use a range of skills...
1. UtilityUtility is the satisfaction one gets by consuming a good or a service.
2. Cardinal and Ordinal approaches of analyzing utility.
a) The Cardinal Approach
This approach advances that utility can be measured numerically and subjectively in a unit called Utils. For example a consumer...