The Assumptions or axioms of ordinal approach in economics (Part 2)

Ordinal approach

Read the part 1 of ordinal approach…. https://articlesacademy.com/assumptions-ordinal-approach-part-1/

 

6) Two commodities model:

              There was a flaw in the utility approach that it was based upon one commodity model i.e., U=f(Q)

But the indifference curve approach considers the phenomena of complementary goods which assumes that utility depends upon two commodities or two commodity bundles as, U=f(x, y)

 

7) Axiom of consistency:

                   The consumer is consistent in his decisions. It means if in one period he prefers ‘A’ combination to ‘B’ combination, he will not prefer ‘B’ combination to ‘A’ combination in any period.

 

8) Axioms of Dominance:

This assumption states that a consumer prefers more to less. As if any bundle like ‘A’ has more units of x and y than the other bundle like ‘B’, then the consumer will prefer bundle A to B, because more is always preferred to less. Again if any bundle like E has more units of x while the units of y remain the same as compared with the bundle ‘F’, the consumer will prefer E over F because more is preferred to less.

 

9) Axiom of reflexsiveness:

                     Any bundle or combination like ‘A’ is indifferent in itself.

 

10) Axiom of transitivity:

                    This axiom states if the consumer is indifferent between two combinations, he will also be indifferent between the third combinations.

It is as:

A  I  B

B  I  C

A  I  C

 

* Where I stands for indifferent.

 

Such relations of transitivity also exist in favour of preference as

 

A > B

B > C

A > C

 

* Where ‘>’ shows preferred over.

 

11) Axiom of non-satiation or Monotonicity:

                    This assumption means that a consumer is not over-supplied with any commodity or a consumer does not like to get the big amount of one commodity.

These are the assumption or axiom of ordinal approach.

 

Please follow and like us:
error20

articlesacademy

Leave a Reply

error

Enjoy this blog? Please spread the word :)