3 SE and ME decomposition videos for Normal Goods, Perfect Substitutes and Perfect Complements

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For next two days we will discuss substitution and income effects. What are these? When the price of a good changes, it changes demand for that commodity. Well, this entire change can be broken down into two effects, one substitution effect and other income effect.

In these videos, we have presented the decomposition of price effect into substitution effect and income effect for normal goods, perfect complements and perfect substitutes. Continue reading →

2 Price consumption curves videos

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In these videos we discuss what is price consumption curve and how to derive demand curve from these. Price consumption curve is the locus of equilibrium points when price of one of the good changes.

One application of derivation of PCC and hence demand curve for perfect complements is also done for better understanding Continue reading →

3 MRS conditions for Cobb Douglas, Perfect Complements and Perfect Substitutes

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In the following videos, we try to find MRS for several utility functions, say, cobb douglas, perfect complements, perfect substitutes. MRS calculates the rate at which one good is substituted for another, keeping utility constant. MRS for Cobb Douglas changes at every point along an indifference curve. MRS for perfect complements is same along a vertical or horizontal strip, while it is not defined at the kink. In case of perfect substitutes, MRS is same along the entire indifference curve.

Continue reading →

MRS of perfect complements

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Derive the MRS in case of perfect complements

Continue reading →

Perfect complements’ utility function u=min{ax,by}

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why perfect complements have the utility function of the form u=min{ax,by} ? Continue reading →

5 Mathematical Derivation of Demand Curves of Cobb Douglas, Perfect Complements, Perfect Substitutes, Quasi-linear and max utility functions

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In the following videos we show how to derive marshallian demand vector of the form x*(p,m) and y*(p,m)

Budget equation is m=p1x + p2y

We have several utility functions. Our motive is to derive maximum utility subject to the budget or income given. Continue reading →

Perfect Complements

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Perfect complements are those goods, which have to be used together to satisfy a want. For example: car and fuel. This video explains what are perfect complements, what is the form of their utility function and how to draw an indifference curve of perfect complements. Continue reading →