By Anthony Hope
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Extra info for El prisionero de Zenda
Between the two bundles. For example, the household gives up some convenience of living in town to obtain additional peace and quiet, by living in the suburbs. A measure for this substitution is called the marginal rate of substitution (MRS), deﬁned as the negative of the slope of an indifference curve. It is equal in magnitude to the indifference curve’s slope. 6), the slope of an indifference curve is Indifference Curve Slope = dx2 dx1 U =constant , where U = constant (dU = 0) indicates that utility is being held constant as the slope changes.
Highly skilled craftspeople as well as computerbased methods can create perfect reproductions that are indiscernible from the original simply by observation. Pommerehne and Martin investigated what individuals (households) seek when acquiring works of art. Their hypothesis is that a perfect reproduction may function as a substitute for an original work of art with respect to aesthetic considerations. As a test of this hypothesis, they measured individuals’ willingness to pay for reproductions, speciﬁed in relative terms as a percentage share of the willingness to pay for the original.
Sources: H. Simon, “A Behavioral Model of Rational Choice,” in Models of Man, Social and Rational: Mathematical Essays on Rational Human Behavior in a Social Setting, New York: Wiley (1957); Y. Salant, “Procedural Analysis of Choice Rules with Applications to Bounded Rationality,” American Economic Review 100 (2011): 724–748. 4 This ranking may be represented by a utility function U = U (x) = U (x1 , x2 , . . , xk ). Utility is the ability or power of a commodity or commodity bundle to satisfy wants when a household consumes the commodity or bundle.