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Showing posts with the label price and substitution effect

Decision Making as Output and Bounded Rationality

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  The classical economics theories proceed on the assumption of rational agents. Rationality implies the economic agents undertake actions or exercise choices based on the cost-benefit analysis they undertake. The assumption further posits that there exists no information asymmetry and thus the agent is aware of all the costs and benefits associated with the choice he or she has exercised. The behavioral school contested the decision stating the decisions in practice are often irrational. Implied there is a continuous departure from rationality. Rationality in the views of the behavioral school is more an exception to the norm rather a rule. The past posts have discussed the limitations of this view by the behavioral school. Economics has often posited rationality in the context in which the choices are exercised rather than theoretical abstract view of rational action. Rational action in theory seems to be grounded in zero restraint situation yet in practice, there are numerous restra
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The Economics of Plant and Animal Milk

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  A couple of days, one chanced upon a tweet by PETA on animal milk and its impact as against the use of plant milk. Implied in the tweet, given the way animals are milked, it would make sense to shift to plant based milk. Without doubt, it sounds quite great in theory. It is well documented on the treatment of animals as they are milked in the industrial farms. In the earlier days, the animals were milked at home. Normally, there would be few cows/buffaloes that would be reared. These would be milked as against the demand for the product. There would of course some amount that was milked for self-use. Yet with passage of time, the demand for milk increased while the agrarian families usually engaged in rearing cattle declined. There was a shift to the urban centres owing to industrialization. The demand for milk in urban centres had to be met by relatively lesser number of agrarian families owning dairy farms thus necessitating the transportation of milk. This invariably led to impro
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