Can two indifference curves intersect

Two indifference curves cannot intersect because that will violate the transitivity principle. This video explains just that. Continue reading →

Indifference curves and MRS

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

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 →

Monopoly equilbrium

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See the question

Compare bundle X with other bundles, assuming monotonicity Continue reading →

Marginal utility

Define marginal utility. Marginal utility is the additional utility which consumer derives from consuming additional unit of commodity Continue reading →