Explain about the money metric utility functions, Microeconomics

Assignment Help:

Explain about the money metric utility functions.

The Money Metric Utility Functions:

It is a nice construction including the expenditure function which comes up into a variety of places within welfare economics. See some prices p and some specified bundle of goods x. Some given question can be asked there as: how much money would a specified consumer require at the prices p to be as well off as he could be through consuming the bundle of goods x. When identify the consumer's preferences, simply solve the given problem as:

m(p, x) ≡ minz pz

that is u(z) = u(x).

which is as m(p, x) ≡ e(p, u(x)).

This type of function is termed as money metric utility function. This is also termed as the "minimum income function," or as "direct compensation function," and with a variety of other names. As, for fixed p, m(p, x) is only a monotonic transform of the utility function and for itself a utility function.

A similar construct is there for indirect utility termed as the money metric indirect utility function that is known by

µ(p; q, m) ≡ e(p, ν (q, m)).

It is µ(p; q, m) measures how much money one would require at prices p to be as well off as one would be facing prices q and acquiring income m. Only as in the direct case, µ(p; q, m) is only a monotonic transformation of an indirect utility function.


Related Discussions:- Explain about the money metric utility functions

Assignement, need help for my micro assignment

need help for my micro assignment

Shifts the market supply curve, This firm will maximize profits by producin...

This firm will maximize profits by producing the level of output that corresponds to point: a. b. c. or d. ??   Refer to Figure for a perfectly competitive firm. Given the

Define direct marketing, Direct Marketing This is a marketing tool des...

Direct Marketing This is a marketing tool designed to elicit instant action from the customer through direct contact.

Economic reforms and reduction of regional disparities, Economic Reforms an...

Economic Reforms and Reduction of Regional Disparities: Another important objective of development is to reduce regional disparities. Government has been helping the backward

Sources of finance to business enterprises, explanation of sources of finan...

explanation of sources of finance to business enterprises in Nigeria

Variable and total cost curve , Variable and Total cost curve    ...

Variable and Total cost curve    * Consequently (from the table which is given): - MC initially decreases with increasing returns  0 through 4 units of output

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