Statement : “Every point on the Marshallian Demand curve is an optimum Choice po

Question

Statement : “Every point on the Marshallian Demand curve is an optimum Choice point (as found from the Indifference Curve diagrams).” State if you agree or disagree with this statement and carefully explain your position. Note: Use mathematics to argue if you want to, but it is not required. Statement : “Every point on the Marshallian Demand curve is an optimum Choice point (as found from the Indifference Curve diagrams).” State if you agree or disagree with this statement and carefully explain your position. Note: Use mathematics to argue if you want to, but it is not required.

Explanation / Answer

Agree.

The basic assumption of the demand curve is that other things remaining constant, the demand curve plots the quantity demanded of the goods against the price per unit. Among one of the factors that are held constant are price of other goods. When the demand is plotted according to the Marshallian demand curve, the costs of other goods are not considered as constant. That is the customer is free to choose from all related goods that are available in the market and the Marshallian demand curve represent the curve in which the consumer is indifferent to the consumption of the goods.

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