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Nilanjan Bhowmick AIR 3, CSIR NET (Earth Science)
Pooja Kurmi posted an Question
September 13, 2020 • 14:39 pm
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50 points
50 points
- UGC NET
- Commerce
January 2017 7 match the items of list i with items of list ii and indicate the code of their correct matching. list list i 1. extension and a. non-price quanti
January 2017 7 Match the items of List I with items of List II and indicate the code of their correct matching. List List I 1. Extension and A. Non-price quantity relationships of demand contraction of demand 2. Ordinal utility approach B. Income effect of a price rise greater than its substitution effect C. Transitivity and consistency of 3. Increase and decrease in choices demand D. Price quantity relationships of 4. Giffen goods demand Codes A B C D (a) 4 (b) 2 (c)3 (d) 1 2 2 3 1 4
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Rucha rajesh shingvekar Best Answer
Assumptions of Ordinal Utility Approach Rationality: It is assumed that the consumer is rational who aims at maximizing his level of satisfaction for given income and prices of goods and services, which he wish to consume. He is expected to take decisions consistent with this objective. Ordinal Utility: The indifference curve assumes that the utility can only be expressed ordinally. This means the consumer can only tell his order of preference for the given goods and services. Transitivity and Consistency of Choice: The consumer’s choice is expected to be either transitive or consistent. The transitivity of choice means, if the consumer prefers commodity X to Y and Y to Z, then he must prefer commodity X to Z. In other words, if X= Y, Y = Z, then he must treat X=Z. The consistency of choice means that if a consumer prefers commodity X to Y at one point of time, he will not prefer commodity Y to X in another period or even will not consider them as equal. Nonsatiety: It is assumed that the consumer has not reached the saturation point of any commodity and hence, he prefers larger quantities of all commodities. Diminishing Marginal Rate of Substitution (MRS): The marginal rate of substitution refers to the rate at which the consumer is ready to substitute one commodity (A) for another commodity (B) in such a way that his total satisfaction remains unchanged. The MRS is denoted as DB/DA. The ordinal approach assumes that DB/DA goes on diminishing if the consumer continues to substitute A for B.
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Rucha rajesh shingvekar
the price reduction increases consumer purchasing power, known as the income effect (an outward shift of the budget constraint). ... Any good where the income effect more than compensates for the substitution effect is a Giffen good.
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Rucha rajesh shingvekar
(a) Increase in demand refers to a rise in demand due to changes in other factors, price remaining constant. Decrease in demand refers to fall in demand due to changes in other factors, price remaining constant.
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Rucha rajesh shingvekar
Option (c) is correct
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