Codinal theory - consumer choice concernin utility, Macroeconomics

Assignment Help:

Ordinal Theory:

A Short Note In ordinal approach, utility is measured ordinally i.e., qualitatively (not numerically or quantitatively). Alternatively, consumer can rank her preferences according to the order she wants to compare but not in terms of the different amount. It's a qualitative measure and therefore more realistic measurement of utility or satisfaction. There are two different approaches of ordinal theory, viz.,

1) Indifference curve approach 

2) Revealed preference approach 

Indifference Curve Approach:

Indifference curve is constructed by taking utility level constant, so different indifference curves imply  different level of utility for same consumer. The equilibrium is achieved when indifference curve become tangent to the budget line. 

Revealed Preference Approach:  In revealed preference approach, consumer equilibrium can be found by ranking different bundle of goods in the commodity space. Given the budget constraint, consumer chooses the best bundle for which her utility will maximise. This theory was originally constructed by the famous economist Paul. A. Samuelson.  


Related Discussions:- Codinal theory - consumer choice concernin utility

Describe the corresponding equilibrium strategies, Only two identical firms...

Only two identical firms i = A;B, each with marginal cost MCi = 40 and no fixed cost, operate in a market with demand: Q     p 1    160 2    120 3     90 4     70

Functions of money, Functions of Money During the course of history mo...

Functions of Money During the course of history money has taken various forms. In fact, there is no difficulty in identifying money but the problem is defining money. Economis

Investment multiplier, what is the formula for calculating investment multi...

what is the formula for calculating investment multiplier for 4 sector economy?

How many pounds of potatoes will she purchase, Potatoes cost Janice $1 per ...

Potatoes cost Janice $1 per pound, and she has $5.00 that she could possibly spend on potatoes or other items. If she feels that the first pound of potatoes is worth $1.50, the sec

Show the adjustment process to new equilibrium using graph, Consider the mu...

Consider the multiplier model we have studied in class. Assume that the economy is initially in equilibrium and that real income is $180. The marginal propensity to expend is 0.66.

Production function and growth, Q. Production function and Growth? From...

Q. Production function and Growth? From the simple production function Y = f(L, K), we can classify three sources of growth:  An increase in L. An increase in K.

BANK, HOW CAN CENTRAL BANK INFLUENCE THE STABILITY OF THE BANKING SYSTEM?

HOW CAN CENTRAL BANK INFLUENCE THE STABILITY OF THE BANKING SYSTEM?

Commercial banks: balance sheet, Commercial Banks: Balance Sheet The ac...

Commercial Banks: Balance Sheet The accompaning table gives the balance sheet of a commercial bank in a simplified format. The balance sheet contains particulars of a Bank's cu

Business economics, Critically evaluate measures used by governments and ce...

Critically evaluate measures used by governments and central banks to manage the economies of their countries. By critical evaluation use convincing arguments for or against measur

Cost curves, the difference between the AC and the AVC curve

the difference between the AC and the AVC curve

Write Your Message!

Captcha
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!

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