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Example 11 CONSUMER BEHAVIOR: CONSUMPTION SIDE ANALYSIS (CONTINUED) THE INDIFFERENCE CURVE APPROACH OR ORDINAL APPROACH.
This ordinal way to deal with utility comprises posing the inquiry regarding whether the purchaser favors one blend or heap of merchandise to one more mix or heap of products.
Ordinal methodologies don’t need an “estimation” of the utility an individual increases, rather, just a positioning of the different packs arranged by inclination.
An apathy bend is a line that outlines every one of the various focuses on which the shopper is detached as for the utility he infers (at the end of the day it is a mix of all equi-utility focuses).
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It is attracted to product space, for example, a decent Y on the upward pivot and a decent X on the flat hub. Aloofness bends are bowed in towards the beginning. CS301 MIDTERM PAST PAPER
At the end of the day, its slant diminishes (in outright terms) as we drop down along the bend from left to right.
Minor RATE OF SUBSTITUTION.
The normal incline of the lack of concern bend between any two focuses is given by the adjustment of the amount of good Y partitioned by a change in the amount of good X. CS301 MIDTERM PAST PAPER
This is known as the minor pace of replacement (MRS). MRS states how many units of a decent you need to provide up all together get an extra unit of another benefit.
A reducing peripheral pace of replacement (MRS) is connected with the guideline of lessening minor utility. MRS is equivalent to the proportion of the minor utility of X to the peripheral utility of Y.
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