Skip to main content
3 votes

Do standard consumer theory axioms rule out corner solutions?

Here are some examples of preferences that satisfy (1) completeness, (2) transitivity, (3) continuity, (4) non-satiation, and (5) strict convexity of the indifference curves, along with the ...
Amit's user avatar
  • 8,966
3 votes
Accepted

Do standard consumer theory axioms rule out corner solutions?

A textbook example of a utility function with frequent corner solutions is perfect substitution, e.g. $U(x,y) = x + 2y$. This, however is not strictly convex. But if you think about it, the corner ...
Giskard's user avatar
  • 29.3k
2 votes

Why is the marginal utility of money assumed to be constant in Marshallian Theory of Consumer Behaviour

Unlike the ordinal analysis or the revealed preference approach, where there is no need for a measuring rod, the cardinal utility analysis requires a measuring rod. Money acts as this measuring rod. ...
Pallak Goyal's user avatar
1 vote

Looking for an universal utility function

Here is an example where $x_i$s are necessities and will always be consumed in positive quantities and $y$ and $z$ will be consumed in positive quantity only when income of the individual is above a ...
Amit's user avatar
  • 8,966

Only top scored, non community-wiki answers of a minimum length are eligible