Theory of consumer behavior, International Economics

Assignment Help:

Q. Write about the assumptions of the theory of consumer behavior based on the cardinal utility approach.

1. Rationality- It is assumed that the consumer is a rational being in the sense that he satisfied his wants in order of their preference

2. Limited money increment- He had a limited money income to spend in the goods and services to choose to consume

3. Maximization of Satisfaction- every rational consumer intends to maximize her satisfaction from given money income

4. Utility is cardinally measurable- The cardinalists have assumed that utility is cardinally measurable and that utility of one unit of a commodity equals the units of many which a consumer is prepared to pay for it

5. Diminishing marginal utility- It is assumed that utility gained from the successive units of a commodity consumed decreases as a person consumes them

6. Constant marginal utility of money- It remains constant whatever the level of a consumers income

7. Utility is additive- Not only utility is cardinally measurable, but also that utility derived from various goods and services consumed by a consumer can be added together to obtain the total utility.


Related Discussions:- Theory of consumer behavior

Opportunity cost, Using examples, from the government, illustrate the signi...

Using examples, from the government, illustrate the significant opportunity cost.

Free trade, what are the limitations of net barter terms of trade

what are the limitations of net barter terms of trade

Fixed versus floating exchange rates, 1 Answer True or False. Brief explain...

1 Answer True or False. Brief explain your answer. No credit without explanation. a Bretton Woods. During the Bretton Woods system countries with large current account surpluses

Reciprocal demand, Offer curves with example and explabation

Offer curves with example and explabation

Evaluate how homes macroeconomic policies affect foreign, Q. Imagine a wor...

Q. Imagine a world with two large countries, Home and Foreign. Evaluate how Home's macroeconomic policies affect Foreign. Compare the small and the large country cases; consider

Causes of the u.s. savings and loans crisis, Q. Explain the causes of...

Q. Explain the causes of the U.S. Savings and Loans crisis of the early 1980s. Answer: On the one hand permitting S&L to make a lot riskier loans for instance loans on co

Modes of Entry and Internalisation, Although the elegance and comprehensive...

Although the elegance and comprehensiveness of transactions costs reasoning has provided the internalisation approach with a powerful logic (Rugman, 1981, 1985), it is still defici

Real income or economic welfare of the united states, Q. The Brazilian fir...

Q. The Brazilian firm is charging its foreign (U.S.) customers one half the price it is charging its domestic customers. Is this bad or good for the real income or economic welfa

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd