Search results
Results from the WOW.Com Content Network
Convex preferences imply that the indifference curves cannot be concave to the origin, i.e. they will either be straight lines or bulge toward the origin of the indifference curve. If the latter is the case, then as a consumer decreases consumption of one good in successive units, successively larger doses of the other good are required to keep ...
A set of convex-shaped indifference curves displays convex preferences: Given a convex indifference curve containing the set of all bundles (of two or more goods) that are all viewed as equally desired, the set of all goods bundles that are viewed as being at least as desired as those on the indifference curve is a convex set.
Right graph: With fixed probabilities of two alternative states 1 and 2, risk averse indifference curves over pairs of state-contingent outcomes are convex. In economics and finance , risk aversion is the tendency of people to prefer outcomes with low uncertainty to those outcomes with high uncertainty, even if the average outcome of the latter ...
An indifference curve can be detected in a market when the economics of scope is not overly diverse, or the goods and services are part of a perfect market. Any bundles on the same indifference curve have the same utility level. One example of this is deodorant. Deodorant is similarly priced throughout several different brands.
The concave portions of the indifference curves and their many-dimensional generalizations, if they exist, must forever remain in unmeasurable obscurity. [ 12 ] The difficulties of studying non-convex preferences were emphasized by Herman Wold [ 13 ] and again by Paul Samuelson , who wrote that non-convexities are "shrouded in eternal darkness ...
In the case of two goods this function could be, for example, (,) = +. The quasilinear form is special in that the demand functions for all but one of the consumption goods depend only on the prices and not on the income. E.g, with two commodities with prices p x = 1 and p y, if
If the axes depicting coconut collection and leisure are reversed and plotted with Crusoe's indifference map and production function, [1] figure 2 can be drawn: Figure 2: The Robinson Crusoe economy's production function and indifference curves. The production function is concave in two dimensions and quasi-convex in three dimensions. This ...
To maximize social welfare, a point on the UPF would be chosen that also falls on the highest indifference curve for society. The shape of the utility possibility curve is often represented as being concave to the origin, as cardinal utility is often assumed. Cardinal utility implies that consumers can rank their preferences over goods (utility ...