GMS 402 Chapter 4: Chpater 4
24 Oct 2016
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A consumer is an individual who purchases goods and services from rms for the purpose of consumption. In characterizing consumer behaviour, there are two important factors to consider. >consumer opportunities - represents the possible goods and services consumers can afford to consume. >consumer preferences - determines which of these goods will be consumed. Preference ordering is assumed to satisfy four basic properties: 1. completeness - we assume the consumer is capable of expressing a preference for, or indifference among all bundles. 2. more is better - the consumer views the products under consideration as goods instead of bads . Indifference curve: a curve that de nes the combinations of two goods that give a consumer the same level of satisfaction. You would prefer bundle a over bundle d because we bundle a your getting the same amount of good. All points on the indifference curve provide the same level of satisfaction . i don"t care response.
