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Monica posted an Question
May 29, 2020 • 19:19 pm 30 points
  • UGC NET
  • Economics

Upper contour set indifference curves x

Doubts: - Upper contour set Indifference curve -what is meant by preference in two dimensions -within the above concepts what this function is explaining P(y) ={x in X: x>=y}

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    Nidhi taparia best-answer

    As far as "preferences in two dimensions" is concerned, you can think of it this way that when we study Marshallian / cardinal utility analysis, we are concerning with preference in a one-dimensional space. That is, the consumer is listing out his desirability for one good. But in case of Hicksian / ordinal utility analysis, preferences become two-dimensional. We begin considering combinations of two goods.

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    Nidhi taparia Best Answer

    An upper contour set is nothing but the most preferable set. In the image, the highest indifference curve is the upper contour set, in the sense that all the combinations it shows are more preferable to the consumer than all other combinations. The mathematical notation - P(x) = {y : y ≥ x} This basically implies that the upper contour set of x is actually a set of y, where y means those combinations that are more desirable tha or at least as desirable as x.

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