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

Find the break-even point, The Widget Manufacturing Company must replace a ...

The Widget Manufacturing Company must replace a widget machine, and is evaluating the capabilities of two systems. A requirement of management is that the machine chosen must be p

The growth of per-capita gdp in the period immediately, An economy has the ...

An economy has the following parameter values: s ?=.3,d ?=.1,A ?=1,andL ?=100.2 The economy begins at steady state but at some point is attacked by Godzilla, destroying 70% of the

What are the important tools to consider monetary policy, What are the impo...

What are the important tools to consider Monetary Policy? Important tools to consider Monetary Policy: a. What the money demand curve is b. Why the liquidity preference m

Insurance firm processes claims, Your Insurance firm processes claims throu...

Your Insurance firm processes claims through its newer, larger high tech facility and its older, smaller low-tech facility. Each month, the high-tech facility handles 10,000 claims

Determine about the interest rates, Determine about the interest rates ...

Determine about the interest rates The interest rate may be fixed or floating. If it is fixed, you will pay the same percentage for the entire duration of the loan. With a floa

United states postal service, The United States postal service report 95% o...

The United States postal service report 95% of first class mail within the same city is delivered within two days of the time of mailing. Six letters are randomly sent to different

Inverse market supply curve, The inverse market demand curve for a good is ...

The inverse market demand curve for a good is p = 100? 0.25Q. the inverse market supply curve for the good is p = 20 + 0.55Q. Calculate the equilibrium price and quantity, consumer

Define individual consumer and total producer surplus, Define the individua...

Define the individual consumer surplus and total producer surplus. Individual consumer: Individual consumer surplus is the net profit to an individual buyer through the purc

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