Indifference curves and MRS


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Along an indifference curve, utility is constant. At every point along an indifference curve, consumer derives same satisfaction. This video explains, what is an indifference curve, what is the meaning of MRS (Marginal rate of substitution) and how to calculate MRS Continue reading

Utility is ordinal


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Utility is ordinal. All you are concerned is with, ranking of preferences. For example, between two bundles A and B, if U(A) = 14 and U(B) = 12, then A is preferred over B. This conclusion remains same if you say, U(A) = 10 and U(B) = 8  or U(A) = 5 and U(B) = 4.  Continue reading

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