NOTES

INDIFFERENCE CURVE ANALYSIS The concept of Indifference Curve Analysis was first propounded by British economist Francis Ysidro Edgeworth and was put into use by Italian economist Vilfredo Pareto during the early 20th century. However, it was brought into extensive use by economists J.R. Hicks and R.G.D Allen. Hicks and Allen criticized Marshallian cardinal approach of utility…

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In this post you will learn about the concept of consumer equilibrium concept and equilibrium in case of one commodity and two commodities. CONSUMER EQUILIBRIUM A consumer is said to be in equilibrium when he is buying such a combination of goods as leaves him with no tendency to rearrange his purchases of goods. Consumer…

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LAW OF EQUI MARGINAL UTILITY The Law of Equi Marginal Utility was presented in 19th century by an economists H. H. Gossen. This is known as Gossen’s Second law of consumption. This law is based on the principle of obtaining maximum satisfaction from a limited income. It explains the behavior of a consumer when he consumes more…

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LAW OF DIMINISHING MARGINAL UTILITY The Law of Diminishing Marginal Utility states that the amount of satisfaction provided by the consumption of every additional unit of a good decrease as we increase the consumption of that good. Marginal Utility is the change in the utility derived from the consumption of an additional unit of a…

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UTILITY ANALYSIS The simple meaning of ‘utility’ is ‘usefulness’. In economics utility is the capacity of a commodity to satisfy human wants. Utility is the quality in goods to satisfy human wants. Thus, it is said that “Wants satisfying capacity of goods or services is called Utility.” ACCORDING TO PROF. WAUGH “Utility is the power of…

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