All Questions
Tagged with consumer-theory marginal
7 questions
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Why is the marginal utility of money assumed to be constant in Marshallian Theory of Consumer Behaviour
While studying the Marshallian Theory of Consumer Behaviour, I came across the assumption that the marginal utility of money is assumed to be constant. Can someone please explain why is this so?
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Question about an interpretation of the MRS
Given the marginal rate of substitution of $x$ for $y$ : $\frac{u'(x)}{u'(y)} $
I know one can interpret this as the amount of $y$ one is willing to give up for an additional unit of $x$, or the ...
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Why can utility functions be continuous, and what does this imply for marginal utility?
I am studying microeconomics at the introductory undergraduate level and two related but distinct questions are puzzling me.
First, my textbooks express utility functions as continuous functions by ...
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Is MRS supposed to have a minus sign or not? What's there to say about convexity of preferences?
If we have a utility function $U(x_1, x_2) = x_1(x_2+1)^2$ of some consumer, then
$$MRS_{x_1, x_2} = \frac{\color{red}{-}(x_2+1)}{2x_1}$$
Some books have a $\color{red}{-}$. Others and Wiki don't ...
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Link between elasticity and marginal utility
The above is taken from "Economics" 8th Edition by John Sloman, a textbook commonly used at the introductory undergraduate level.
I would like assistance in understanding the bracketed portion - how ...
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Solve for the bundle component that makes one as 'well off' as earlier
Suppose we have a (presumably time independent?) utility function $U(x_1,x_2)$ for consumer Rita.
1.
What is Rita's MRS of $x_2$ for $x_1$?
$$MRS_{x_1, x_2} = \frac{MU_{x_1}}{MU_{x_2}} = \frac{\...
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Find Indifference curve/s and Marginal Rate/s of Substitution given only one point
Arka likes fries. She wants to consume as much as possible. She consumes either regular (1 oz) or large sizes (5 oz).
Draw her indifference curve through $(x_R, x_L) = (10,0)$ and her indifference ...
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