How would you derive MRS from MU

Marginal rate of substitution (y for x) is the amount of y, individual gives up, for one more additional unit of x. MRSyx is the ratio of marginal utilities of x and y Continue reading →

How would you derive Marginal utility from a given utility function

Marginal utility is the additional utility derived from the consumption of one more unit of commodity consumed. This video explains, when you are given any utility function, how can you derive marginal utility function for the same. Continue reading →

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 →