Exploring The Negative Properties Of Derived Demand X Curve In The Context Of Indifference Curve | Elon University - Edubirdie

University:
Elon University
Course:
ECO 1000: Economics
Academic year:

2023
Views:

24

Pages:

2
Author:

MCerah

Exploring the Negative Properties of Derived Demand X Curve in the Context of Indifference Curve Draw the derived Demand X Curve (derivative of MUx curve) Px Py M x y MUx MUy Umax 10 8 80 3,6 5,5 18,5 14,8 108,6 8 8 80 4,7 5,3 17,9 18,1 125,33 14 8 80 2,4 5,8 19,4 11,2 89,8 MU 19.4 18,5 17,9 MUx 2, 43 ,64, 7X Px 14 10 8 Dx 2, 43 ,64, 7X Explanation: • The downward curve of demand X explains that the marginal utility gained from consuming good X is decreasing over time, hence the Mux curve is negative. • The demand curve for good X is linear. • If the price of good X decreases, the quantity of good X increases, but its marginal utility decreases. So the law of demand applies to goods X. As the curve above shows, at a price of X (Px) of 14, the quantity of X is 2.4 and the marginal utility (MUx) is 19.4. However, if Px drops to 8 with the number of X rising to 4.7, but marginal utility drops to 17.9.

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