ECON101 Lecture Notes - Lecture 15: Situation Two, Indifference Curve

• School: University of Waterloo
• Department: Economics
• Course: ECON101
• Professor: Emmanuel Carvahlo

Document Summary

Ranking: if the consumer in the household faces two combinations (a and b) what we assume that the consumer is able to tell us whether they prefer a > B or b > a or indifferent about a+b. Transitivity: as a consumer, you are faced with three combinations. If they consumer/household prefers a > b and prefers b >c then we can conclude that the consumer prefers a > c. Magnitude: the consumer/household will always prefer more to less 4. If in period one: consumer prefers a >b, in period two they must prefer a > b. Consists of various points representing combinations of commodities that provide the household or consumer with the same level of satisfaction (consumer is indifferent to all these commodities) Combinations 1, 3, 5, 7, 9 and 11 provide the consumer with the same levels of satisfaction (i1) Combinations 2, 4, 6, 8, and 12 provide the consumer with the same levels of satisfaction (i2)