Principles of Microeconomics

Principles of Microeconomics

Consumer Theory: - It possible to describe the choices of consumers. Consumer can refer to a family or it can refer to the government of a country, too. He can choose form only 2 returns: x and y. Products refer to a singe product or go that is consumed, a group products. X could represent consumer goods and y majuscule goods. Consumers have limited resources. They wish to have more of y and they give up some of x and vice versa.

Y = The arrive budget, y, has to be spent on the 2 products. (Budget = p * q).

Px and Py = the hurt of the products.

qx and qy = the quantities consumed.

Budget line is Y = px qx + py qy

Utility & Indifference Curves: We scratch that customers are able to choose from two alternatives that offer the comparable products in different quantities. The heart and soul utility of a consumer increases as the amount of products consumed increases, every additional units consumed adds less and less to the total utility of the consumer.

If a Consumers consume 2 different products, x & y , total utility function is an change magnitude function of the quantity consume, qx & qy.

U = Æ' ( qx , qy).

Indifference Curve shows all product combinations of x & y that give the same pleasure level to the consumer. The Collection of stoicism curves is Indifference Map.

U apiece soulfulness have different level of satisfaction Utilities. The higher the indifference curve, the higher is the level of satisfactions of the consumer.

At point E, customer consumes more x and less y. choosing B or D makes the customer better, each time Utility raises to U2,then U3.

Point C is the best option.

Indifference Curve Expresses the...

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