Presentation of Microeconomics

Presented To:“Sir Ehsanullah”

Presented By:

Zimran Ali (BB14047)

Indifference curve analysis

What is indifference curve?

Ans: An indifference curve shows all the combination of two products “A” and “B” that will yield the same level of satisfaction to a consumer.

Writer:-BERHEIM, WHINSTONPublisher:- TATA MCGROW HILLPage No:- 119Edition:- Special Indian

Indifference curve analysis

1- What is MRS xy ?

The rate at which the consumer is prepared to exchange good “X” and “Y” is known as Marginal Rate Of Substitution

Writer:- H.L. AHUJAPublisher:- S.CHANDPage No:- 116Edition:- Revised

Indifference curve analysis

MRS XY

Schedule Combination Good (x) Good (y) MRS xy

A 1 12 4 B 2 8 3 C 3 5 2 D 4 3 1 E 5 2

Indifference curve analysis

2- What is MRS xy?A measure of the consumers

willingness to trade one good for another.

Writer:- MARK A.ZUPANPage No:- 51Edition:- 9

Indifference curve analysis

Ordinal:-The ordinal utility theory says that utility is not measurable like price and quantities. But one can order the utilities from different goods. That issue can say whether the utility of an orange is less then, equal to or greater then the utility of an apple.

Writer:- ELLEN MILLERPage No:- 89Publisher:- TATA MCGRAW HILL

Indifference curve analysis

Cardinal:-

Cardinal is utility measurable. The cardinal utility theory says that it is measurable just as price and quantities are. That issue can assign a number of units to each commodities. e.g.

An Orange= 5 UtilsAn Apple= 6 Utils

Writer:- ELLEN MILLERPage No:- 89Publisher:- TATA MCGRAW

HILL

Indifference curve analysis

LAW OF EQUI-MARGINAL UTILITY Consumer equilibrium through cardinal

Units MU (x) MU (y)

1 20 50

2 17 46

3 10 30

4 3 20

Indifference curve analysis

Law of Equi-marginal Utility:-

MU (x) = MU (y)