ECON-UA 2 Lecture Notes - Lecture 5: Normal Good, Inferior Good, Demand Curve
12 Sep 2016
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All consumers want to maximize their level of satisfaction: the budget constraint (bc) = relative price ratio = opportunity cost (oc) of 1 more concert https://www. evernote. com/shard/s234/sh/2543c9f4-782e-4d9b-a6b7-9fe46a189a80/75057f80c167b2db. = relative price ratio = opportunity cost (oc) of 1 more concert. Theory of consumer behaviour makes the following assumptions about consumer preferences: preferences are rational, preferences satisfy the follwoing. Any two alternatives can be compared/ranked, and one is preferred or the 2 are equally valued. Being able to rank according to the order of preference. A b c: more is better. Consumer always prefers a bundle with more of both goods or more of at least one good and no less of the other. 12/9/2016, 1:22 pm give up one good in order to increase of another good marginal rate of substitution (mrs) between 2 goods. Mrs of y for x along a segment of an ic as: the maximum rate at which a consumer is willing to trade y and x".
