September 2020

Concept and Assumptions of Ordinal Utility Analysis

Leave a Comment / Microeconomics, Study Materials /

Learning Objective To explain the concept and assumptions of ordinal utility analysis Concept of Ordinal Utility Analysis The theory of consumer behavior helps us to observe and predict consumers’ responses to changes in prices, income, tastes and preferences, price of related goods, and promotional expenditures. Understanding the consumer’s responses to changes in such variables helps […]

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Basic Mathematical Concepts Used in Economics

2 Comments / Microeconomics, Study Materials /

Economics through its different theories and principles help to economic agents and participants in their decision-making processes and help them to get their objective fulfilled. For instance, a manager may have to think of what level of output he has to produce. Managers will produce the level of output that maximizes the form’s profit if

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Criticisms of Cardinal Utility Analysis

3 Comments / Microeconomics, Study Materials /

The Cardinal utility approach provides a sound basis for analyzing consumer behavior based on the arithmetic measurement and expression of utility. However, economists have pointed out some criticisms or drawbacks of cardinal utility analysis. The following are the basic drawbacks or limitations of cardinal utility analysis. An incorrect assumption of cardinal measurement of utility According

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Derivation of Demand Curve under Cardinal Utility Analysis

1 Comment / Microeconomics, Study Materials /

The key purpose of the analysis of consumer behavior is to derive a consumer demand curve. Here we will discuss the derivation of the demand curve under cardinal utility analysis in the case of one commodity and case of two commodities. Learning Objective To deal with the derivation of the demand curve under cardinal utility

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