Question

Define each of the following concepts and provide an illustration where necessary.

1. Nonsatiation
2. Bads   
3. Partial Equilibrium
4. Perfect Competition

Answer 1

A) The property of nonsatiation states that for every bundle that exists, there exists another bundle very close to the original bundle, which is preferred over the original one

B) Bads are those goods which a consumer dislikes consuming and increases his utility by consuming less of it

C) Partial equilibrium, as the name suggests takes into account only a part of market to arrive at equilibrium.

D) Perfect competition is a market structure which consists of a large number of buyers and sellers selling homogeneous products. These markets operate for the purpose of welfare maximization and do not make any economic profits