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

Prices in the market, Who sets the prices in the market and what is the nat...

Who sets the prices in the market and what is the nature of competition? Is it buyer versus sellers or buyer versus buyers? What happens if the price is too high or too low? Is the

Exchange rates, can a country have a current account deficit and a capital ...

can a country have a current account deficit and a capital account deficit at the same time?

Various control variables in the data set, From stock and Watson 3rd editio...

From stock and Watson 3rd edition introduction to econometrics Using the data set Teaching Ratings described, carry out the following exercises. a) Run a regression of Course

Process to calculate gross domestic product, process to calculate gross dom...

process to calculate gross domestic product We just include finished goods and services - which is, anything that is sold directly to consumer. Electric power sold to a steel m

Theory of trade cycle, how the theories of trade cycle affects in the busin...

how the theories of trade cycle affects in the business

Major union wage settlement, Show the effects on the price level and real G...

Show the effects on the price level and real GDP of a major union wage settlement that significantly increases wages. Is this a supply shock, a demand shock, or both?

E.., law of indefference curve

law of indefference curve

Marginal propensity to consume mpc, Marginal Propensity to consume or known...

Marginal Propensity to consume or known as  (MPC)  relates to a change in net or total consumption expenditure to a change in the total disposable income. Symbolically it is writt

Neo-classical thinking on growth, Neo-classical thinking on growth: Neo...

Neo-classical thinking on growth: Neo-classical  thinking  on  growth  is  owed  to  the Robert  Solow  whose  exogenous  growth models in the of the mid-20th century remained

Show the changes in the exchange rate, Q. Show the Changes in the exchange ...

Q. Show the Changes in the exchange rate? Assume that United States is our home country and the current euro exchange rate in direct notation is SD = 1.5 (euro/USD). In indirec

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