Household Optimization Problem

By James E Njoroge, M. Sc. (VWL) - Economic Coach, Consultant and Lecturer / February 22, 2024 / Foundations of Economics, Economic Blog, Economics, Household Economics, Markets, Microeconomics

Household Optimization Problem Read Post »

In this article, you will learn how to formally describe the household optimization problem in your microeconomics. To understand how private households make their consumption and resource allocation decisions in the real world, we shall look at the crucial elements that affect optimal decision-making, e.g., price, income, and preference changes. A private household is one of the primary agents making economic decisions relevant to other economic agents, e.g., government and firms. Here is a revisit of the household maximization problem described in many microeconomic and economics textbooks. But with a clear outline and a better understanding of how households set goals, their opportunity cost optimization process, and the interpretation of outcomes.

Economics, Household, Leisure Consumption, Marginal Rate of Substitution, Maximization, Maximum Principle, Microeconomics, Minimization, Minimum Principle, opportunity costs, Optimization, Private Consumption, Relative Price, Utility

Opportunity Costs

By James E Njoroge, M. Sc. (VWL) - Economic Coach, Consultant and Lecturer / August 7, 2023 / Foundations of Economics, Behavioral Economics, Economic Consultancy, Economics

Opportunity Costs Read Post »

One of the most critical concepts in economics is the concept of opportunity costs. It is the most fundamental issue of economics as a social science and explains the decision-making and behavior of economic subjects (or agents). Economic agents are private households, firms, and the government as a public household. While explaining the economic concept of opportunity costs, focus on why people choose to do, consume, or even spend time and resources on what they do. How do you make your choices and decisions? 1. Introduction: Definition of Opportunity Costs How can we define opportunity costs? Opportunity costs are costs

Basics of Economics, Costs, decision-making, economic concept, economic lectures, Economics, English, Freiburg im Breisgau, Marginal Rate of Substitution, Marginal Rate of Technical Substitution, mental accounting, non-monetary opportunity costs, opportunity costs, relative advantage, relative costs, specialization, University

Preferences and Utility Theory

By James E Njoroge, M. Sc. (VWL) - Economic Coach, Consultant and Lecturer / February 21, 2023 / Microeconomics, Behavioral Economics, Business Administration, Economic Blog, Economics, Foundations of Economics, Markets

Preferences and Utility Theory Read Post »

Preferences and utility theory are critical concepts in microeconomics, explaining household decision-making behavior. Preferences refer to how households make choices necessary to satisfy their needs when comparing bundles of goods. Utility theory uses mathematical concepts to express these preferences and elucidate household satisfaction levels. Rational preferences must meet completeness, transitiveness, continuity, convexity, and monotonousness. Various preferences exist, including substitutes, complements, perfect and imperfect substitutes, and perfect compliments. Preference and utility theory ultimately help derive the formal opportunity costs of alternatives in household theory.

decision-making, Economics, Household economics, Marginal Rate of Substitution, opportunity costs, Preferences, Rational Decision, Rationality, Relative Price, Utility Theory

Production Technology in Economics

By James E Njoroge, M. Sc. (VWL) - Economic Coach, Consultant and Lecturer / November 12, 2021 / Foundations of Economics, Business Administration, Economics, Macroeconomics, Mathematics, Microeconomics

Production Technology in Economics Read Post »

Production technology in economics refers to the sum of all knowledge and capabilities of the society to combine scarce resources to produce final goods for consumption. This concept covers all industrial processes and exchanges within the value chain. The production function is the mathematical interpretation of production technology. Important concepts include the return to scale, the marginal product of inputs, and the change of marginal productivity. These concepts are also applied at both microeconomic and macroeconomic levels. The understanding of production technology requires some mathematical background.

Change of Marginal Product of Inputs, Economics, Inputs, Macroeconomics, Marginal Product of Inputs, Marginal Rate of Technical Substitution, Microeconomics, opportunity costs, Outputs, Production function, Production technology, Return to Scale of Inputs

Democracy in Modernity

By James E Njoroge, M. Sc. (VWL) - Economic Coach, Consultant and Lecturer / October 8, 2019 / Economic Blog, Economic Consultancy, Foundations of Economics, Globalization

Democracy in Modernity Read Post »

How modern is democracy?
Is the modern global society the Democracy we want and the World in which the future generations would like be born into? The current society needs to familiarize itself with the principles of democracy, amidst the current trend in society to neglect the willingness to diplomatic cooperative and constructive dialogue between different views and ideologies.

Democracy, Diplomacy, Economy, English, future Generation, generational Justice, Globalization, liberty, morality, opportunity costs, Peace, Political Environment, sustainable society

Household Optimization Problem

Like this:

Opportunity Costs

Like this:

Preferences and Utility Theory

Like this:

Production Technology in Economics

Like this:

Democracy in Modernity

Like this:

opportunity costs

Household Optimization Problem

Share with your network:

Like this:

Opportunity Costs

Share with your network:

Like this:

Preferences and Utility Theory

Share with your network:

Like this:

Production Technology in Economics

Share with your network:

Like this:

Democracy in Modernity

Share with your network:

Like this:

Blogstatistiken