Read this article to learn about the top fifteen frequently asked questions on Preference Theory of Demand. Q.1. What are Total Utility and Marginal Utility? Ans. Total utility of anything to an individual is the total pleasure or benefit it yields at a given period of time. Marginal utility is the change in total utility resulting from a change in [...]
A. The Pragmatic Approach to Demand Analysis: Many writers have questioned the usefulness of the various theories of consumers' behaviour. There has been an increasing awareness that although the various approaches to utility are theoretically impressive, there is very little an applied economist can use to explain the complexity of the real world. Thus many writers have followed a pragmatic [...]
The Shape of the Individual Firm's Demand Curve: The analysis of the previous section was concentrated on the aggregate demand for consumers' goods. However, for the theory of the firm and the understanding of the decision-making process of the firm we must look at the demand for the product of the individual firm. Consumers' demand is a small fraction of [...]