In this article we will discuss about the applications of indifference curve approach. The applications:- 1. Consumer’s Equilibrium 2. Theory of Production (Producer’s Equilibrium) 3. Measurement of Consumer’s Surplus 4. Application in the Theory of Exchange and a Few Others. Indifference curve approach is free from all the criticism levelled against cardinal approach or utility […]
Applications of Indifference Curve Approach | Microeconomics
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The Marginal Rate of Substitution (MRS) | Indifference Curve | Microeconomics
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The slope of an indifference curve at a particular point is known as the marginal rate of substitution (MRS). It measures the rate at which the consumer is just willing to substitute one commodity for the other. Let us suppose we take a little of good 1, ∆x1, away from the consumer. Then we give […]
Properties of Indifference Curves | Microeconomics
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We may now examine the implications of the axioms in the context of the properties of indifference curves. In this context we also refer to a few additional axioms. We start with the implications of the axiom of non-satiation. Recall that a consumption bundle X is preferred to Y if it contains more of at […]