This standard theory of consumer’s choice starts with the assumption that the consumer can rank any two consumption bundles (x1, x2) and (y1, y2) in order of their desirability. This means that the consumer has two alternatives: (i) Either he can determine that one of the consumption bundle is strictly better than the other. (ii) […]
Consumer’s Preferences and Its Assumptions | Microeconomics
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Examples of Consumer Preferences | Microeconomics
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Here is a list of examples of consumer preferences. 1. Perfect Substitutes: Two goods are perfect substitutes if the consumer is ready to substitute one for the other at a constant rate, or, to be more specific, if the consumer is willing to substitute the goods on a one-to-one basis. Suppose a consumer uses both […]
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 […]