Indifference curve

Learning Curves The learning curve, also referred to as the experience curve, is a simplistic, yet powerful, estimating technique which has become an essential concept/tool used for strategic planning within project management (Kerzner, 2013; Lieberman, 1987; Linton & Walsh, 2013). Bailey and Gupta (1999) suggested that the learning curve should probably be called the “forecasting curve” because it is primarily used to forecast the future expenditure of project resources (as cited in McKee &…

Intertemporal preferences describe the way consumers make decisions between how much food they would consume today versus how much food they would consume tomorrow. The consumption of today would influence the consumption of food tomorrow. Some basic assumptions for intertemporal preferences are transitivity, consumer prefer more over less, and consumers can choose between two alternative streams (today versus tomorrow). A decision requires a trade off by the consumers between costs and benefits…

rather than keeping purchasing power constants. The slutsky substitution effects gives consumer enough money to go back to his old level of consumption. While the hicks substitution effects gives the consumer enough money to get back to his old indifference curve". (HAL R.…

Theory of consumer choice Consumer choice denotes the decision an individual will have to make on the products or services they wish to purchase. Theory of consumer choice thus analyses how individuals decide to spend their money keeping in mind their preferences as well as budget constraints. It assumes that people will want to maximize their utility through an optimal combination of goods that they can afford. This theory has three underlying assumptions: The first being utility maximization,…

sellers will spend cost more money to supply. The diagram of tax on sellers will be shown following. As shown in diagram (a), the previous equilibrium price of supply a can of cola is $5.00 and we suppose that tax equals to $3.00, which leads to the S1 curve shifts upward and get a higher equilibrium price at $8.00. Additionally, the blue frame in the diagram is government revenue,…

An isoquant is a curve that show all the combinations of inputs that yield the same level of output. ‘Iso’ means equal and ‘quant’ means quantity. Therefore, an isoquant represents a constant quantity of output. The isoquant curve is also known as an “Equal Product Curve” or “Production Indifference Curve” or Iso-Product Curve.” The above figures represent different shapes of isoquant. The Linear Isoquant(sky blue)-…

minimize their opportunity cost. However, people could not predict future. They have to risk being punished after crime. Some people willing to take the risk, and some do not. Some people are indifference between taking the risk and not taking the risk. So, now we will focus on the group of people who are indifference to two activities, since the one who willing to take the risk…

Income Affect the Consumer’s Choices • The change in consumption that resulting when price change moves the consumer to a higher or lower indifference curve. • The effect of a change in income on the quantity of a goods consumed is called the income effect. • So, The consumer is able to choose a better combination of goods on a higher indifference curve. • Now, in this figure, Initially, • PF = $4 • PM = $1 • So, the effect of price change will be, • PF falls to $2 • budget constraint…

Question 01 a) b) Consumer pays P1 originally, after impose of tax, consumer pays P2, there is a consumer burden = P2 – P1 c) d) Burden is depends on elasticity, its not depends on who imposed on. Whether the tax is imposed on sellers or buyers, the consumer burden are the same, consumer pays and producer receives are the same as well. However it would be logistically and practically easier to impose it on seller rather than the buyers (huge amount of buyer thus too hard to collect from every…

point C. This would be on a higher indifference curve of U compared to the indifference curve that would be on point P (not shown). Assuming these initial conditions, suppose an export biased growth causes the PPF to shift to A’B’ (assuming good 1 is the exported good). This would lead to a change in the relative price of the two goods and so a change in the Isovalue line. The new Isovalue line is tangent to the new PPF at point P’. The highest indifference curve the economy can attain now is U’…