MICROECONOMIC THEORY Essay Example | Topics and Well Written Essays - 1500 words

MICROECONOMIC THEORY - assay Example1-12). On the other hand, consumers will purchase expensive carrefours whenever their income goes up and less expensive products when the income reduces. It is spare that consumers normally make various choices with an aim of maximizing benefits they receive in return for the money they devolve and the system posits that consumers spend only the money they have without accounting for saved money as this committal to writing explains. Dean (2009, p. 25-42) explains that the level of satisfaction that a consumer obtains from purchasing various products is based on utility expire whose arguments affect consumers overall satisfaction level. There are trade-offs faced by the consumers while making consumption finiss and these can be explained with utility function. Diminishing peripheral utility describes consumers preferences in a very significant way making some economic analysis to take it as a basic starting point. According to Levin & Milg rom (2004, pp. 5-15), consumer theory illustrates that a consumer prefers a group of products packaged together called big money and that a consumer would prefer a bundle and disregard the brand. The theory explains that consumers would rather base their purchase end on the number of products in the bundle or the size of the bundle but not the products brand. Sassatelli (2007, pp. ... n bundle, if consumers decide to give up on one good, they would add more of other substitute as a way of maintaining their level of utility (Sassatelli 2007, pp. 57-60). Consumers normally substitute products for others even if the 2 goods are not the same and this describes most peoples preferences. Slope of an indifference curve shows the supreme number of unit of measurements of a particular good a consumer is willing to substitute to acquire one unit of the other thus providing an economic way of understanding what the indifference curve really show. It is also cost noting that the slope of an indifference curve depends on the consumption bundle considered. The slope of an indifference curve represents the marginal rate of substitution between two products (Sirgy 1982, pp. 287-300). Summary of Simon Herbert Article Simon attempts to explain the link between psychological science and economics by resting on a notion of economics as a science and a discipline (Simon 1959, pp. 253-260). He explains that economics as a science can be used in describing and predicting the behavior of various kinds of consumers and entrepreneurs. His research endeavor intended to understand the processes that participate in human decision making although despite his effort to investigate the issue he did not have a gigantic impact in the decision making (Zalega 2012, pp. 77-99). He rejected the assumption of perfect rationality do in the mainstream economics and he further emphasized the limitations of the cognitive processes. Simon (1959, pp. 255-265) points out that economics is widely oblivious by normative economics while descriptive macroeconomics offers the scientific base for policy prescription. He explains how the theory of consumer demand was derived from indifference curve and considering of