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What are the characteristics of a utility function that represents perfect substitutes?
A utility function representing perfect substitutes shows that two goods can be easily exchanged for each other without affecting overall satisfaction. This means that the consumer is indifferent between the two goods and will always choose the one that is cheaper or more available.
Why might an economic policy maker choose the golden rule level of capital?
The golden-rule level is the steady state of capital which maximizes consumption. Since policy makers are concerned with the economic wellbeing of the people then naturally they would choose the one which maximizes consumption so people are better off.
Equi marginal utility?
Equimarginal utility principle states that to maximise the utility, a rational consumer spends his budget on consuming the amount that gives him the highest marginal utility per dollar for each commodity. For example,say Tom has a budget of $5. He has two commodities to choose from- a pen and an erazer. Let each commodity cost him the same amount of money- $1.Now marginal utility for each is:Number Marginal Utility of pen/dollar Marginal Uitlity of erazer/dollar1 11 92 10 73 7 54 4 3According to the principle or law of equi marginal utility, Tom's (a rational consumer) tendancy will be to buy a combination of pen and erazer that will give him maximum satisfaction, until his budget is used up entirely.In this case, Tom's budget is $5. So, he will tend to buy 3 pens and 2 erazers.Now, suppose, that the two goods (pen and erzer) don't cost the same amount. Say, the pen costs $2 instead of one. In that case, the combination will be different.Number Marginal Utility of pen/dollar Marginal Utility of erazer/dollar1 5 1/2 92 5 73 3 1/2 54 2 3In this case, Tom will have the combination of 2 pens and 3 erazers.Mathematically,the principle is like this:Marginal utility of A/ price of A = Marginal Utility of B/Price of BIf they are not equal in any case, they should be maximum MU for both goods within the budget line.
What is the assumption of the indifference curve?
There are 4 basic assumptions for indifference curve 1. Analysis is restricted to goods that yield positive marginal utility, or simply, more is better. 2.Marginal rate of substitution, MUx/MUy, or the ratio at which a household is willing to substitute Y for X. As you consume more of X and less of Y, X becomes less valuable in units of Y 3. Consumer have the ability to choose among the combination of goods and services available. 4. Consumer choices are consistent with a simple postulate of rationality. if A consumer prefer A to B and B to C , then when confronted consumer will prefer A to C as well.
What is cardinal and ordinal approaches in economics?
Human wants are unlimited and they are of different intensity. The means at the disposal of a man are not only scarce but they have alternative uses. As a result of scarcity of recourses, the consumer cannot satisfy all his wants. He has to choose as to which want is to be satisfied first and which afterward if the recourses permit. The consumer is confronted in making a choice. For example, a man is thirsty. He goes to the market and satisfy his thirst by purchasing coca cola instead of tea. We are here to examine the economic forces which make him purchase a particular commodity. The answer is simple. The consumer buys a commodity because it gives him satisfaction. In technical term, a consumer purchases a commodity because it has utility for him. We now examine the tools which are used in the analyzes of consumer behavior.Type your answer here...
What are the characteristics of a utility function that represents perfect substitutes?
A utility function representing perfect substitutes shows that two goods can be easily exchanged for each other without affecting overall satisfaction. This means that the consumer is indifferent between the two goods and will always choose the one that is cheaper or more available.
Why might an economic policy maker choose the golden rule level of capital?
The golden-rule level is the steady state of capital which maximizes consumption. Since policy makers are concerned with the economic wellbeing of the people then naturally they would choose the one which maximizes consumption so people are better off.
Where can one find out who the energy supplier to their new home is?
One can find out who the energy supplier to their home by calling the local utility company. Sometimes they have multiple suppliers that one can choose from or sometimes they have one supplier that services the whole area.
Why should a principal choose to sell directly to the consumer in tourism industry?
Principles should choose to sell directly to consumers because they can negotiate on the price. Sometimes, the principal can raise the price to earn more money.
How does advertising fit in neo classical econmics in maximising utility?
They have a better idea of all the products they can choose from, thus allowing them to choose the one they like best, maximizing their utility.
Which concept holds that human behavior is governed by the individual calculation of the benefit versus the costs of one acts?
Rational choice theory holds that human behavior is governed by individuals making decisions based on weighing the benefits and costs of their actions. It posits that individuals will choose the option that maximizes their personal utility or satisfaction.
Meaning of right to choose example?
right to choose is the fundamental rights of consumer as government saw that some of the company making the monopolistic way of selling the product because of that government passed this right in the favor of consumer on 1986 as the right to choose .It protects consumer and give them freedom to choose their favorite product from different product ,it also destroys the monopoly of consumer
What are the release dates for Free to Choose - 1980 Who Protects the Consumer 1-7?
Free to Choose - 1980 Who Protects the Consumer 1-7 was released on: USA: 1980
Utility allows you to choose when and how often maintenance tasks are performed?
disk cleanup
What is installed when you choose the Windows Server Backup Feature?
Windows Server Backup utility
What lets users choose which folders and files to include in a backup?
In the windows backup and restore utility in the control panel you can choose what gets included in the backup
Where could a person find consumer reviews so they can choose the best camera phones?
One can find consumer reviews so that they may be able to choose the best camera phones from several different places. One can find consumer reviews on Amazon, or Test Freaks.
