0
marginal rate of substitution
Wiki User
∙ 10y ago
Add your answer:
Earn +20 pts
Supply curve slope downward?
supplycurve is negative slope in decreasing cost industry
Why does the demand curve slope upward?
1. consumers buy goods that are less expensive
Explain the subsititution and income effect of decrease in price?
substitution effect is the explanation for the downward slope of the aggregate damnd curve.
How the slope of the demand curve can be explained by the principle of marginal utility?
The demand curve is negatively sloped because it is based on the principle of marginal utility and this utility decreases as consumption increases. The demand price which depends on the marginal utility of a good also declines as consumption increases, so quantity and price are inversely related, leading to the negative curve and the law of demand.
True or False the steeper the demand curve the less elastic the demand curve?
It is false that the steeper the demand curve the less elastic the demand curve. The steeper line is used in economics to indicate the inelastic demand curve.
Slope of indifference curve?
indifference curves slopes downward to the right
How do you find the slope of an Indifference curve?
You find the tangent to the curve at the point of interest and then find the slope of the tangent.
Indifference curve analysis is not much in use because it only tells us that demand curve has a negative slope except when they don't .?
indifference curve analysis is not much in use because it only tells us that demand curve has a negative slope except when they don't ....
What are characteristics of an indifference curve?
indifferent curves are convex to their origin, they do not intersect, and have a negative slope
What happens to the marginal rate of substitution as you move along a convex indifference curve?
The MRS measures how much of a good you are willing to give up in exchange for one more unit of the other good, keeping utility constant. The MRS diminishes along a convex indifference curve in that as you move down along the indifference curve, you are willing to give up less and less of the one good in exchange for the other. The MRS is also the slope of the indifference curve, which increases (becomes less negative) as you move down along the indifference curve. The MRS is constant along a linear indifference curve, since in this case the slope does not change. The consumer is always willing to trade the same number of units of one good in exchange for the other.
What is the different between indifference map and indiffirence curve?
Indifference curve is a curve that shows consumption bundles that give the consumer the same level of satisfaction. Indifference map, on the other hand Indifference curve is a graph of two or more indifference curves.
What is Consumer equilibrium under ordinal utility approach?
Consumer equilibrium is the point where consumer attains highest level of satisfaction. There are two conditions of equilibrium under ordinal approach 1- Necessary Condition: 'Budget line is tangent to the highest possible indifference curve.' 2- Sufficient Condition: 'At equilibrium, Indifference curve must be convex to the origin' Thus, at equilibrium , Px/Py (absolute slope of Budget line) = dy/dx (absolute slope of Indifference Curve) (In simple words, it'd determination of consumer's equilibrium with the help of Indifference curve.)
Features of indifference curve?
two indifference curve never cut each other..
What is shape of indifference curve?
what will be the shape of indifference curve if one of the two goods is a free commodity
Can a single indifference curve cross itself?
a single indifference curve cannot cross itself.
What are the major characteristics of an indifference curve?
The three major characteristics of an indifference curve are: 1. They are negatively sloped 2. They are convex to the origin 3. Indifference curve cannot be intersected
Explain the consumer equilibrium with the help of indifference curve?
Explain the consumer equilibrium with the help of indifference curve?
