Curves of indifference. Solving the problem of the optimal choice of the consumer

The basis for the study of personal consumption (individual consumers and households) are indifference curves. The indifference curve is a line, each point of which represents such a combination of two goods that the consumer does not care which of them to choose. Indifference curves graphically reflect the consumer’s system of preferences. For the convenience […]

Preference relation and utility function

Unlike the previous one, the second approach does not require measuring utility in any quantity. The consumer here can compare the usefulness of individual goods or a set of them and order them according to the degree of preference. The theory of the optimal choice of the consumer proceeds from the fact that he exercises […]

The main stages of building a mathematical model

To use a mathematical model for a specific production and economic situation, information technology should be applied. Information technology makes it possible to accurately distinguish from the set of real production and economic situations exactly the one that fully corresponds to specific circumstances. This technology consists of the following eight stages. Step 1. SELECTION OF […]

market factors

In the case of a fixed exchange rate, the activities of speculators in the foreign exchange market depend on the degree of trust in the government. If they are convinced that the government does not have sufficient reserves to maintain a weakening currency, speculation against this currency will increase, which will accelerate its devaluation. If […]