• Consumer Theory
    Required: Show that the equilibrium condition and consumer equilibrium under both cardinal and ordinal utility theory are identical. They both assume that the consumer is rational. Consumer equilibrium, under cardinal utility theory, is achieved when the sufficient condition is met. That is, the...
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  • Merchant of Venice
    ONSUMER EQUILIBRIUM CARDINAL AND ORDINAL UNIT 5 CONSUMER EQUILIBRIUM: CARDINAL AND ORDINAL APPROACHES Structure 5.0 Objectives 5.1 Introduction 5.2 Cardinal utility approach to consumer behaviour 5.3 The law of eventual diminishing marginal utility 5.4 Consumer’s equilibrium 5.5 Basis of...
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  • Understanding Consumer Choice
    concept of consumer equilibrium under the cardinal utility theory? (b) Explain how a demand curve is derived under the cardinal utility theory 3 Although water is essential to human life, it is cheaper than silver. Explain paradox. 4 what are the assumptions of the cardinal utlity theory? 5(a) what...
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  • Theory of Consumer Behaviour
    Objectives After going through this chapter you shall be able to understand the following concepts Consumer Behaviour Theory- Ordinal Approach and Cardinal Approach Total Utility, Marginal Utility, Relationship between Total Utility and Marginal Utility Law of Diminishing Marginal Utility...
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  • Utility Study
    . GRAPH 2.3: Graph Shows the dot where Option A and option B for apples has been chosen. 3.0: DIFFERENCES BETWEEN CARDINAL AND ORDINAL UTILITY THEORIES What are the differences between cardinal and ordinal theories? The main differences between cardinal and ordinal theory can be explained by the...
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  • Intermediate Microeconomics Lecture Notes
    determine the order of preference among the different goods. The main ordinal approach theories are the indifference curve and revealed preference theories. 3.1(a) Cardinal Utility Theory Assumptions a) Rationality The consumer is assumed to be rational. i.e. he aims to maximize his...
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  • Comsumer Behaviour
    diminishing marginal utility applies to consumer behavior. THEORIES OF CONSUMER BEHAVIOR a) Cardinal/Neo-classical utility theory The theory holds that utility derived from consumption of a good or service is measurable subjectively using cardinal numbers (e.g. 1, 2, 3 …) by units of...
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  • facility location procedure
    (a) What is the difference between ordinal utility and cardinal utility? (b) Explain why the assumption of cardinal utility is not needed in order to rank consumer preferences. (c) State the basic assumptions regarding consumer preferences. Briefly clarify the meaning of each of those...
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  • Microecon_group_assignment
    original utility. In general, there are two approaches of utility, which are cardinal utility and ordinal utility. Utility in cardinal approach can be measured by using the unit ‘utils’. The level of utility usually depends on the consumer willingness to pay. However, in ordinal approach...
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  • Micro Economics
    CHAPTER ONE THE THEORY OF CONSUMER BEHAVIOR Contents • UtilityCardinal Utility • Derivation of Demand curve • Ordinal Utility • Marginal rate of Substitution • Optimum Consumer • Income Consumption • Price Consumption Curve • Elasticity of Demand...
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  • Difference Between Cardinal and Ordinal Utility
    and explain the behavior of a consumer, however they can be categorized in to two:  Cardinal utility theory:- it argues that a consumer has the capacity to measure the level of satisfaction that she derives from consumption of a given quantity of a commodity.  Ordinal utility theory:- it argues...
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  • Business Economics
    ) Utility, usefulness and pleasure (v) Utility is Abstract There are two approaches for measurement of utility : (i) Measurement of utility in terms of money is called Cardinal Utility Approach. The amount of money which a consumer is prepared to pay for a commodity in the indirect...
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  • Utility
    Utility Utility is a theory in economics that measures the satisfaction one gains from consumer a good/product. Cardinal Utility Vs Ordinal Utility Cardinal Utility - measured in Utils Ordinal Utility – according to preference Law of Diminishing Marginal Utility The more we have of a...
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  • Reading Me
    Behaviour. Utility analysis: Cardinal and Ordinal utility, Equi-marginal utility. Indifference curve and its properties. Consumer Equilibrium with Cardinal and Ordinal approach, Consumer surplus, Price, Income and Cross Elasticities of Demand. Production Theory: Production Functions with one variable...
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  • Mangerial Economics
    such elasticities can be done exactly in the same way as for the price or income elasticities. UNIT II CARDINAL UTILITY ANALYSIS THEORY OF CONSUMER BEHAVIOUR The basic material relating to demand, supply and market equilibrium has been presented in Chapter – 3. The demand side of...
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  • oumh
    . Description and Explanation of Cardinal and Ordinal Utility 2.1. Cardinal Utility Theory 3 2.2. Ordinal Utility Theory 5 3. Differences between Cardinal and Ordinal Utility Theories 3.1. Measurement Of Satisfaction 12 3.2. Numbers 12 3.3. Valuation of Satisfaction 13...
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  • microeconomics
    economics · Economic methodology · Distinction between microeconomics and macroeconomics Topic 2: The price theory · Theory of demand · Theory of supply · The concept of equilibrium · Application of price theory Topic 3: Theory of the consumer · The cardinal utility theory · The ordinal...
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  • Nature and Scope of Business Economic
    different ways: (1) Cardinal Utility Analysis and (2) Ordinal Utility Analysis Accordingly, we shall examine these two approaches to the study of consumer s equilibrium in greater defait. Utility Analysis or Cardinal Approach : The Cardinal Approach to the theory of consumer behaviour is based upon the...
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  • Nature and Scope of Managerial Economics
    and curves. Market equilibrium. * Consumer behavior and rational choice: cardinal and ordinal approaches of consumer utility. * Maximization of consumer utility by the technique of indifference curves and budget lines. * Corner solution and consumer surplus. International convergence of...
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  • Utility
    utility (satisfaction) but will have to fall to the combination that he can afford. This can be illustrated by a diagram as below based on the concept of consumer indifference. Consumer equilibrium In the diagram above, the blue line is the budget line. It shows the different quantities the...
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