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

Best estimate of real gdp, Consumption = $3 trillion, Investment spending =...

Consumption = $3 trillion, Investment spending =$2 trillion, Government purchases = $2 trillion, net exports via the ROW is $0 trillion. 1. What is the best estimate of real GDP

What are forms of price floors to lead inefficiency, What are forms of pric...

What are forms of price floors to lead inefficiency? Price floors frequently lead to ineffectiveness in the forms of: a. Inefficient allocation of sales in between sellers

Explain united states do better than other countries, What does the United ...

What does the United States do better than other countries?

Events x and y are mutually exclusive, The events X and Y are mutually excl...

The events X and Y are mutually exclusive. Suppose P(X)=.05 and P(Y) =.02. What is the probability of either X or Y occurring? What is not probability of X nor Y happens?

Example of indirect taxes and subsidies- accounting system, Example of Indi...

Example of Indirect Taxes and Subsidies- ACCOUNTING SYSTEM   We now permit our government to impose what are called indirect taxes. This category includes sales tax, excise tax,

Testing the hypothesis, An effort to reduce energy costs, a major universit...

An effort to reduce energy costs, a major university has installed more efficient lights as well as automatic sensors that turn the lights off when no movement is present in a room

Assignment, explain the profit maximizing/loss minimizing rule may be appli...

explain the profit maximizing/loss minimizing rule may be applied under the 3 scenarios

Flossy''s budget constraint, Flossy has a quasi-linear utility function, 16...

Flossy has a quasi-linear utility function, 16q1^0.5 + q2. The price of good 1 is fixed at one. Thus, Flossy's budget constraint is q1 + p2q2 =Y, where Y denotes income. 6.1 Compu

Macroeconomic models, Now we will analyse how macroeconomic variables fit t...

Now we will analyse how macroeconomic variables fit together and present models which explain the main macroeconomic variables.  Using these models we can, for instance, analyse

Marginal propensity to save, Marginal Propensity to save  (MPS)  is the r...

Marginal Propensity to save  (MPS)  is the ratio of change in total saving to change in total disposable income. Symbolically,     MPS = ?S/?Y For example, total

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