(i) Giffen goods: Sir Robert Giffen explained the exceptional nature of inferior goods. So these inferior goods (eg) ragi are called Giffen goods.
(ii) When the price of an inferior good falls, the poor will buy less and vice versa.
(iii) It is an exception to the law of demand.

(i) Consumer's surplus = potential price - actual price (or)
(ii) Consumer's surplus = what a person is willing to pay - what he actually pays (or)
(iii) Consumer's surplus = TU - (P x Q)

An indifference curve is the locus of different combinations of 2 commodities which gives the consumer the same level of satisfaction.

(i) Cardinal approach of Marshall- utility is measured by cardinal numbers such as 1,2,3
(ii) Ordinal approach of Hicks and Allen- utility can be compared or ranked or ordered such as I,II,III.

(i) Want satisfying power of a commodity is called utility.
(ii) It is measured in utils.

The slope of a linear demand curve is given as \(\frac{\Delta p}{\Delta q}\)
(i) While price elasticity of demand is given as
\(Ed=\frac{\Delta Q}{\Delta P}\times \frac{P}{Q}\)
(ii) Hence, we can write above equation
(iii) (i) as \(Ed=\frac{1}{Slope\ of\ Demand\ Curve}\times \frac{P}{Q}\)
\(Ed=\frac{1}{\frac PQ}\times \frac{P}{Q}\)
(iv) The above equation states that there exist an inverse relationship between slope of a linear demand curve and Price elasticity of demand.

(i) Cardinal utility of a commodity is measured in money terms.
(ii) Marshall assumes that there is definite relationship between expected satisfaction (utility) and realized satisfaction (actual).
(iii) Marginal utility of money is constant.
(iv) An absence of differences in income, taste, fashion etc.
(v) Independent goods and independent utilities.
(vi) Demand for a commodity depends on its price alone, it includes other determinants of demand.

(i) A consumer wants to spend his limited income on apple and orange.
(ii) He will be in equilibrium when he gets maximum satisfaction.

\(\mathrm{K}=\frac{M \mathrm{U_A}}{\mathrm{P_A}}=\frac{M U_O}{\mathrm{P_O}}\)
If \(\frac{MU_A}{P_ A}\) is less than \(\frac{M U_O}{P_O}\) he would transfer money from apple to orange till both are equal.

Total utility	Marginal utility
Increases at a diminishing rate	Goes on diminishing
Reaches maximum	Becomes zero
Diminishes	Becomes negative

Characteristics
Wants are unlimited
(i) Wants are countless and various in kinds.
(ii) When one want is satisfied another want arises.
Wants become habits
(i) When a man starts reading newspaper in the morning it becomes a habit.
Wants are satiable
(i) We can satisfy particular wants at a given time.
(ii) When one feels hungry, he takes food and that want is satisfied.
Wants are alternative
(i) There are alternative ways to satisfy a particular want (eg) idly, dosa.
Wants are competitive
(i) There is competition among wants.
(ii) So we have to choose more urgent wants and satisfy them first.
Wants are complementary
(i) Satisfaction of a particular want requires the use of more than one commodity. (eg) car and petrol.
Wants are recurring
(i) Some wants occur again and again. For ex. if we feel hungry, we take food and satisfy our want.
(ii) But after some time we again feel hungry and want food.

Introduction: Demand is always related to price. Demand is always a specific quantity which a consumer is willing to purchase.
Demand Function: Demand depends upon price. This means demand for a commodity is a functions of price. D = f (P)
Determinants of Demand:
i. Changes in Tastes and Fashions:
 The demand for some goods and services is very susceptible to changes in tastes and fashions.
ii. Changes in Weather:
 An unusually dry summer results in a increase in the demand for cool drinks.
iii. Taxation and Subsidy:
The subsidies will bring down the prices. Therefore taxes reduce demand and subsidies raise demand.
iv. Changes in expectations:
Expectation of rise in price in future results in increase in demand,
v. Changes in savings:
Savings and demand are inversely related.
vi. State of Trade Activity:
During the period of boom and prosperity demand for all commodities tendes to increase. On the contrary, during time to depression, there is general slackening of demand.
vii. Advertisement:
Advertisement is a powerful instrument increasing the demand in the market.
viii. Changes in income:
An increase in family income may increase the demand for durables like video recorders and refrigerators. Equal distribution of income enables poor to get more income.
ix. Change in population:
The demand for goods depends on the size of population. An increase in population tends to increase the demand for goods and a decrease in population tends to decrease the demand (if other things remain constant).

Introduction: J.R.Hicks end R.G.D.Allen refined the Indifference Curve Approach in 1934. Later, in 1939 J.R.Hicks in his book "Value and Capital" gave a final shape to this "Indifference Curve Analysis". This theory is also based on scale of preference.
Assumption:
i. The consumer is rational and his aim is to derive maximum satisfaction.
ii. Utility can be ranked or compared or ordered. by ordinal number such as I, II, III and so on.
iii. The Indifference Curve Approach is based on the concept "Diminishing Marginal Rate of Substitution".
iv. The consumer is consistent. This assumption is called as the assumption of transitivity. If the consumer prefers combination A to B and B to C, then he should prefer A to C. If A>B and B>C, then A>C.
Indifference Schedule:
Indifference Schedule is a table which shows the different combination of two goods that gives equal satisfaction to the consumer.

Indifference Schedule
Apple	Orange
1	20
2	15
3	12
4	10
5	9

Table has five combination of two commodities Apple and Orange. This schedule is called as "Indifference Schedule". He will neither be better off nor whose off which ever combination he 4 chooses.
An indifference curve:

Different combination of two commodities (as found in Indifference Schedule) can be presented in a diagram. Then consumer gets different points and when such points are connected, a curve is obtained. The said curve is called as "Indifference Curve".
An indifference curve is the locus of all combinations of commodities from which the consumer derives the same level of satisfaction. It is also called "Iso-Utility Curve" or Equal Satisfaction Curve".
Explanation:
X axis represents apple and Y axis represents orange. Point 'R' represents combination of 1apple and 20 oranges., at 'S' 2 apples and 15 oranges and at 'T' 3 apples and 12 oranges. Similarly UKV points are obtained. These five points give the same level of satisfaction. The consumer will be neither better off nor worse off ln choosing any one of these points. When one joins all these five points (RS, T) U and V one can get the Indifference Curve 'IC'.