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

Supply, plese give me supply assigement

plese give me supply assigement

Chemical combination, Draw a diagram to show the type of bond between two f...

Draw a diagram to show the type of bond between two flourine atom

Normal and abnormal profits., the diagram used to illustrate of abnormal an...

the diagram used to illustrate of abnormal and normal profits

Malthus and the food crisis, Malthus and the Food Crisis - Malthus pred...

Malthus and the Food Crisis - Malthus predicted starvation as diminishing returns limited agricultural output and the population continued to grow. - Why did Malthus' predic

Ppc, ppc shows microeconomics

ppc shows microeconomics

Calculate currency exchange rate, Question-1 : This question is designed ...

Question-1 : This question is designed to show your understanding of stock market terminology and also the impact of currency exchange rate. You are a Swiss Franc (CHF) based inv

Current daily status(cds), Current Daily Status(CDS): The reference pe...

Current Daily Status(CDS): The reference periods (i.e. a year, a week and a day) are basically used to describe the period for which the workers are employed in the economy. T

Explain supply vs. quantity supplied, Define and explain the following econ...

Define and explain the following economic terms: Economics, Microeconomics & Macroeconomics Positive vs.  Normative Economics Law of Diminishing Marginal Utility Opport

Price mechanism, how does the prices system affect a country

how does the prices system affect a country

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