The utility of x can be written as u(x). It is continuous and strictly increasing on Rn+. There are six properties of the indirect utility function. Such properties are explained along with proof as follows: Property 1: Continuous on Rn++ * R+: Proof: The utility of x, u(x) is a continuous function. There might be the change in the income [...]
In this article we will discuss about the lexicographic orderings by consumers, explained with the help of suitable diagrams. The indifference curves (ICs) would be negatively sloped, i.e., they would be sloping downward towards right like the curves given in Fig. 6.2. Axiom of continuity of preferences ensures that the ICs really exist. However, a consumer may order his commodity [...]
In this article we will discuss about the budget equation and the budget line by consumers. The preference-indifference pattern of the consumer based on the axioms of preferences. The indifference map of the consumer shows that the points lying on any particular IC give the consumer the same level of utility. It also shows that the points lying on a [...]