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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