FINANCIAL ANALYSIS

Financial Analysis



Financial Analysis

Fisher Separation Theorem Opportunities

Fisher proposed the theorem that profit maximization takes its highest level in terms of indifference curves in function of separating the opportunities in two areas:

income that maximizes wealth, and

The consumer maximizes the utility steadily. Here the allocation of resources emphasizes the microeconomic behavior of consumers. That is what is called Fisher separation theorem.

Fisher model shows a geometrical relationship of the Fisher separation theorem. It can be seen that the first curve, more convex to the origin is similar to the production frontier as possible. This is a first step to maximize the benefit with a little more time and / or what could be a process of accumulation of resources, would move to the curve is concave. That would be the separation of opportunities in terms of which

Together are more profitable (Andres, 1997).

The individual has all possible combinations of Y 1 and Y 2, represented by the identity g (Y 1, Y 2) = k. If the example we do so from a consumer perspective, to put the case, the area from the origin to the convex curve designated points of inefficiency in achieving maximum comfort. Only the location within the curve would give a set of combination of goods or use of resources (Y 1, Y 2), such that maximize welfare (Day, 2007).

At this point, represented by Y in the graph, the consumer is performing one of two areas of behavior identified by Fisher: maximization of wealth or welfare. So far we have seen how it develops the hypercompetitive markets, the principles on which it operates and the main action areas which it interacts with competitors. It has also been referred to the shape optimization, as the allocation of resources in general.From beyond the convex curve, the consumer can be defined as the optimal behavior lend or give credit. With this wealth or welfare is to ensure maximum or a function of time. It is a kind of investment, exit on non-terminals that will enable future higher incomes. Consumer choice is at some point in the concave curve, whose representation is the point B on the chart. This is the second area that identifies the Fisher separation theorem: sustained maximization of utility.

So far the analysis has been performed considering an individual, family, institution or entity within a context of opportunities and access to resources. What happens when a society as Latin America, 44% of the population lives in poverty, and within 19% in extreme poverty or indigence (Iman, 1980).

This consideration opens up a whole new topic for article or text more developed Addressed here by way of synthesis. When incorporating the issue of lack of access to resources and / or goods and services, there is talk that the real demand of the population is often transformed into effective demand within the market system. This means that people living in marginal conditions.

To the extent that a country cannot solve the problem of poverty, we have the conditions for it ...