User Account

All Pages

Which function to use depends on the individual

Assignment Help Microeconomics
Reference no: EM13894516

a) Utility maximization means that a consumer chooses in such a way that she gets as much utility as possible. She does not choose utility directly. Utility is, instead, an indirect result of consuming a certain mix of goods. Usually, there are limitations to how she can choose. Among the baskets that she can choose, she chooses the one that gives her the highest level of utility.

b) A utility function is a mathematical expression that gives a value in numbers for, say, different combinations of goods or a certain wealth. For instance:

For two goods: U(q1,q2)=q1*q2

For wealth W:U(W)=√W

Which function to use depends on the individual we are studying.

c) The criterion for utility maximization is that the marginal rate of substitution, MRS, equals the marginal rate of transformation, MRT:

        MRS = MRT

This implies that, at the point of maximization, the slope of the indifference curve is equal to the slope of the budget line.

 

Reference no: EM13894516

Questions Cloud

What affirmative defenses can johnny raise? : What affirmative defenses can Johnny raise?
What is the difference between e-commerce and m-commerce : What is the difference between e-commerce and m-commerce?
Which function to use depends on the individual : Utility maximization means that a consumer chooses in such a way that she gets as much utility as possible. She does not choose utility directly. Utility is, instead, an indirect result of consuming a certain mix of goods. Usually, there are limit..
List the ways an information system can be used : List the ways an information system can be used in a career area of interest to you.
Calculate mccabe''s cyclamate numbe : Show that McCabe's cyclamate number is an interval scale measure. and  Calculate McCabe's cyclamate number on the following source code. Draw a control ?ow graph. Label the regions with Roman numerals.
Why is the study of information systems important to you : Why is the study of information systems important to you? What do you hope to learn from thiscourse to make it worthwhile?
Find a current event article involving emergency management : Find a current event article involving emergency management response

Reviews

Write a Review

Microeconomics Questions & Answers

  The free rider problem

Question: Explain why the free rider problem makes it difficult for perfectly competitive markets to provide the Pareto efficient level of a public good.

  Failure of the super committee is good thing for economy

Some commentators have argued that the failure of the “Super committee” is good thing for the economy?  Do you agree?

  Case study analysis about optimum resource allocation

Case study analysis about optimum resource allocation: -  Why might you suspect (even without evidence) that the economy might not be able to produce all the schools and clinics the Ministers want? What constraints are there on an economy's productio..

  Fixed cost and vairiable cost

Questions:  :   Which of the following are likely to be fixed costs and which variable costs for a chocolate factory over the course of a month?  Explain your choice.

  Problem - total cost, average cost, marginal cost

Problem - Total Cost, Average Cost, Marginal Cost: -  Complete the following table of costs for a firm.  (Note: enter the figures in the  MC   column  between  outputs of  0 and 1, 1 and 2, 2 and 3, etc.)

  Oligopoly and demand curve problem

Problem based on Oligopoly and demand curve,  Draw and explain the demand curve facing each firm, and given this demand curve, does this mean that firms in the jeans industry do or do not compete against one another?

  Impact of external costs on resource allocation

Explain the impact of external costs and external benefits on resource allocation;  Why are public goods not produced in sufficient quantities by private markets?  Which of the following are examples of public goods (or services)? Delete the incorrec..

  Shifts in demand and movements along the demand curve

Describe the differences between shifts in demand and movements along the demand curve. What are the main factors which can shift the demand curve? Explain why they cause the demand curve to shift. Use examples and draw graphs to support your discuss..

  Article review question

Article Review Question: Read the following excerpts from the article "Fruit, veg costs surge' by Todd, Dagwell, published in the Herald on January 25th 2011 and answer questions below:

  Long-term growth, international trade & globalization

Long-term Growth, International Trade & Globalization:- This question deals with concepts such as long-term growth, international trade and globalization. Questions related to trade deficit, trade surplus, gains from trade, an international trade sce..

  European monetary union (emu) in crisis

"Does the economic bailout of Spain and Greece spell the beginning of the end for the European Monetary Union (EMU)?"

  Development game “settlers of catan”

Read the rules of the game, the overview and the almanac for the Development Game "Settlers of Catan"

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd