Individual consumer surplus in the Edgeworth Box

Subject. The consumer surplus conception is an important part of the modern microeconomic theory at the introductory and intermediate levels. Consumer surplus measures the change in the consumer’s real welfare. The article addresses the peculiarities of generation and the main property of the generalized individual consumer surplus, using the Edgeworth Box case. Objectives. The purpose is to find the main property of individual consumer surplus in the Edgeworth Box economy. Methods. The study draws on methods of logical and mathematical analysis. The generalized consumer surplus is correctly constructed, using the mathematical theory of curve integrals of the second type (the theory of line integrals in the Western mathematics). Results. The generalized individual consumer surplus is defined through the respective curve integral along some admissible trajectory in the simple exchange economy (Edgeworth Box). The paper also introduces the notion of the marginal individual consumer surplus, and demonstrates that consumer surplus is a correct individual welfare measure in the Edgeworth Box, and that consumer surplus is zero along any given indifference curve. I consider the numerical example of individual surplus calculation and presentation in the Edgeworth Box. Conclusions. The generalized individual consumer surplus is a correct measure of consumer’s utility change along monotone (weakly monotone) trajectories in the Edgeworth Box. Geometrically, the consumer surplus is presented as an area limited by the reservation price curve from the top and by the reallocation line (curve) from the bottom.

Explaining the behaviour of individuals: theory of consumer choice.

This chapter first introduces the concepts of utility, margin, and free goods. It then discusses two theories to explain consumer behaviour: (i) utility theory; and (ii) indifference theory. Both theories make the reasonable assumption that the objective the consumer has in mind is to get the greatest amount of satisfaction possible from the limited amount of purchasing power he or she possesses. The utility theory, while simple in concept, contains some difficulties which the second approach, using indifference curve analysis, overcomes. The concepts are illustrated with examples involving products such as bread, cigarettes, beer and milk.

OPTIMIZED MANAGEMENT STRATEGY FOR CONSTRUCTION PROJECTS CONSIDERING THE TRADE-OFF OF ESTIMATE SCHEDULE AND COST AT COMPLETION

Nowadays, the minimization of project time and cost is an important issue. However, time and cost problems are difficult to solve. They are affected by the uncertain factor. Then, the construction project always fails to achieve the effectiveness of time and cost performance. It causes delays and cost overrun. In this research, SOS-NN-LSTM is required to establish the estimate schedule to completion (ESTC) and estimate cost to completion (ECTC) prediction model based on time now performance. Then, the prediction model will be integrated with MOSOS to obtain the optimal prediction value. The integration is needed because there is no direct equation to calculate the ESTC and ECTC. The Pareto curve identified based on the prediction values of MOSOS. The Pareto curve is used to determine the optimal trade-off between project duration and project cost. Then, the indifference curve is used to solve the trade-off problem between estimate schedule at completion (ESAC) dan estimate cost at completion (ECAC) which give the decision-maker preference.

MEAT CONSUMPTION AS AN INDICATOR OF ECONOMIC WELL-BEING — CASE STUDY OF A DEVELOPED AND DEVELOPING ECONOMY

The aim of the study was to verify the criterion of meat consumption as a marker of economic well-being, in economies at different phases of development. Meat consumption per capita is a widely used variable which is used to indicate the economic bases for the exclusion of meat and meat products from the diet. The study was performed simultaneously in Austria (a developed country) and Poland (a developing country) in 2015. Descriptive statistics, econometric and descriptive models were used to process the research material. Respondents were classified according to the wealth criterion, measured by the average income per household member in a given country. In the case of the developing economy, it was discovered that the meat consumption function takes the shape of an indifference curve. In the developed economy, once the income per household member exceeds 157% of the average national income, consumers exclude meat and other meat products from their diet for health reasons and reservations concerning the quality and origin of the meat. The consumption of meat in Poland is determined by income amount, at a greater degree than in a developed economy. Low income in Polish families is the reason for the exclusion of meat consumption.

Orthogonal strategy based computer-mediated negotiation: Principles and example

Previous efforts to improve stakeholders’ involvement in planning and decision-making processes mostly put planners and decision makers as the ones who decide which solution is the best for the decision problems. In bottom-up planning and decision-making processes that supposedly involve stakeholders as much as possible, the most common practice is that when stakeholders have different preferences about the decision issues, supra decision makers such as planners and experts gather stakeholders’ preferences, and then, using their expertise and experience, decide what is the best choice for stakeholders. We approach the involvement of stakeholders in planning and decision-making not by relying on planners’ expertise but from a negotiation perspective. Previous works related to stakeholders’ negotiation mostly require stakeholders to engage in a face-to-face negotiation that seldom involves a computer system to improve the process. In this paper, we develop a negotiation system to support multi-issue and multi-stakeholder decision-making problems. In our approach, stakeholders do not directly interact with each other. Their proposals are submitted to a system that produces counter-proposals to reduce the differences among stakeholders’ proposals. Therefore, stakeholders do not exchange their preferences directly, but rather preference elicitations are mediated by the system. This approach is called computer-mediated negotiation. The system itself is based on the principle of an orthogonal strategy. Our computer-mediated negotiation protocol consists of two main phases. The first phase is the preference elicitation phase, which measures stakeholders’ utility functions. The second phase is the e-negotiation phase, in which stakeholders make their proposals and the computer system provides suggestions to improve them. To simulate real-world negotiations where stakeholders make proposals and counter-proposals in a series of negotiation rounds, we implemented the indifference curve approach to enable stakeholders to make incremental changes of their proposals during negotiation. The results from our experiment suggest that our method can produce an optimum solution for a multi-issue and multi-stakeholder decision problem by moving stakeholders’ proposals closer to one another.

Economics and efficiency

This chapter, the longest in the book, explains the fundamentals of microeconomics and its application to the analysis of health and healthcare. The concepts of scarcity and opportunity costs lie at the heart of the economics discipline. Based on the standard production function with two input factors, the important concept of cost-efficiency is explained; and based on the premise of scarcity in the availability of input factors, the concept of opportunity costs is explained. An important insight from consumer theory is that people make trade-offs. Their preferences and income determine their chosen combination of goods, as illustrated by an indifference curve. An important piece of information for policymakers attempting to intervene in people’s demand for healthy, and unhealthy, goods is to know how sensitive demand is to changing prices and income. The chapter explains and defines elasticities of demand.