what is the value of an indifference curve to the economist
Indifference curve Consumer theory uses indifference curves and budget constraints to generate consumer demand curves. For a single consumer, this is a relatively simple process. First, let one good be an example market e.g., carrots, and let the other be a composite of all other goods. Budget constraints give a straight line on the indifference map showing all the possible distributions between the two goods; the point of maximum utility is then the point at which an indifference curve is tangent to the budget line (illustrated). This follows from common sense: if the market values a good more than the household, the household will sell it; if the market values a good less than the household, the household will buy it. The process then continues until the market's and household's marginal rates of substitution are equal.[10] Now, if the price of carrots were to change, and the price of all other goods were to remain constant, the gradient of the budget line would also change, leading to a different point of tangency and a different quantity demanded. These price / quantity combinations can then be used to deduce a full demand curve.[10] A line connecting all points of tangency between the indifference curve and the budget constraint is called the expansion path.[11]
The Little Red Hen The moral of this story is that those who make no contribution to producing a product do not deserve to enjoy the product: "if any would not work, neither should he or she eat."[2]
John Maynard Keynes John Maynard Keynes, 1st Baron Keynes[2] CB FBA (/keɪnz/ KAYNZ; 5 June 1883 – 21 April 1946), was a British economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. He built on and greatly refined earlier work on the causes of business cycles, and was one of the most influential economists of the 20th century and the founder of modern macroeconomic theory.[3][4][5][6] His ideas are the basis for the school of thought known as Keynesian economics, and its various offshoots.
Investment To invest is to allocate money (or sometimes another resource, such as time) in the expectation of some benefit in the future, for example, investment on durable good such as real estate for service industry and factory for manufacturing product development, which are two common types for micro-economic output in modern economy. Investment on Research and Development occurs mainly on the innovation of consumer products.