Microeconomics Case Study

Nitu’s Business School Selection: Riding on an Indifference Curve

OR

Abstract:
The case is meant to study the economic behaviour of a rational consumer who tries to maximise satisfaction within the constraint of the budget. Nitu Gupta, (Nitu) an MBA aspirant, was initially caught in indecisiveness as to which B-School to join. B-Schools in India are categorised by Career Launcher, a leading education service provider in Asia, into eight clusters on the basis of assessment of seven parameters. Going by Career Launcher’s rankings, the best B-Schools that Nitu’s scorings could get her are the ones in cluster 4. But within cluster 4, whether she has to join Symbiosis Institute of International Business, Pune or Indian Institute of Technology – Department of Management Studies, Chennai or opt for IBS, Hyderabad is the moot point. The case eventually resolves the issue through its protagonist Nitu – but not before the notions of indifference curves and budget constraints come to hog the mindscape. How exactly these concepts help achieve the consumer’s equilibrium unravels as the reader thinks through the case.

Pedagogical Objectives:

• To understand the concept and significance of ordinal utility in consumer’s decision making
• To explore the properties of an indifference curve as a tool of ordinal utility
• To analyse the concept of budget constraint and consumer’s equilibrium under the framework of indifference curve analysis.

Keywords : Utility, Marginal Utility and Total Utility, Cardinal Measurement of Utility, Money as Measuring Rod of Utility, Marginal Utility of Money, Law of Diminishing Marginal Utility, Ordinal Measurement of Utility, Indifference Curve Analysis, Properties of Indifference Curve, Shape of Indifference Curve, Marginal Rate of Substitution, Map of Indifference Curves, Business School Rankings, Budget Constraint, Price Line, Indifference and Choice, Consumer’s Equilibrium, Maximization of Satisfaction, Consumer Behaviour, , Economics for Managers, Microeconomics, Business Economics, Behavioral Economics