Page 47 - DECO405_MANAGERIAL_ECONOMICS

Managerial Economics Anand Thakur, Lovely Professional University

Notes Unit 4: Consumer Behaviour (Utility Analysis)

CONTENTS
Objectives
Introduction

4.1 Cardinal and Ordinal Utility
4.1.1 Marginal Utility Analysis

4.1.2 The Law of Diminishing Marginal Utility: Marshillian Approach
4.2 Law of Equi-marginal Utility
4.3 Indifference Curves and its Properties

4.3.1 Assumptions
4.3.2 Properties of Indifference Curve

4.3.3 Budget Line
4.4 Consumer's Equilibrium with Cardinal Approach
4.5 The Consumer's Equilibrium with Ordinal Approach

4.5.1 Changes in Price
4.5.2 PCC and Demand Curve
4.5.3 Income of the Consumer

4.5.4 Price of Related Goods
4.6 Consumer Surplus
4.7 Summary

4.8 Keywords
4.9 Self Assessment

4.10 Review Questions
4.11 Further Readings

Objectives

After studying this unit, you will be able to:

Discuss the concepts of cardinal and ordinal utility
State the concepts of equi marginal utility
Analyse the indifference curve
Explain the concept of consumer equilibrium and consumer surplus

42 LOVELY PROFESSIONAL UNIVERSITY