ECON 1110 Lecture Notes - Lecture 6: Weighted Arithmetic Mean, Partial Derivative, Indifference Curve

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Published on 4 Apr 2016

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Chapter 1: Introduction

Economic credo: economic agents are rational





Partial equilibrium analysis









General equilibrium analysis

 



 !

Chapter 2: Theory of the Consumer-Preferences and Utility

2.1: Introduction

Consumption bundle-



"#$%&'$%&(

)





This assumption is called completeness

Transitivity

*+ ,,) 

)

Monotonicity-

Convexity-'

(

Marginal rate of substitution-.



Utility function-



"#*+ ,

*

Marginal utility-

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Chapter 2: The consumer’s preference relation

)

/01

*$0'020$(0220$

$

o*better

(Strict) preference relation

0 101

o*01equally.

indifference relation

0 1

o*0.

01weak

preference relation

0 101

Assumptions of Preferences

23)





$3

3041145045

30 11 50 5

*041 5045

*0 1145045

The transitivity of preference assumption is meant to rule out irrational

preference cycles

indifference curves possible

*'.

$$6(equally good

$

-

* $2

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ECON 1110 Lecture Notes - Lecture 6: Weighted Arithmetic Mean, Partial Derivative, Indifference Curve

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