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ECON 2310 (47)
Chapter 4

Chapter 4 Intermediate Micro Notes

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ECON 2310
Johanna Goertz

Chapter 4 Economics NotesPrinciplesPreferences41 Principles of decisionmakingPreferences Tell us about a consumers likes and dislikesThe Ranking Principle A consumer ranks in order of preference all potentially available alternative Can have tiesconsumer is indifferent between alternativesThe Choice Principle Among the available alternatives the consumer selects the one that he ranks the highest42 Consumer PreferencesConsumption bundle the collection of goods that an individual consumes over a given period such as an hour day month year or lifetimeHow do people rank consumption bundles Moreisbetter Principle When one consumption bundle contains more of every good than a second bundle a consumer prefers the first bundle Typically people prefer more to lessConsumer preferences w Finely Divisible goods When goods are available in any fraction of a unit the number of alternatives is infinite so we cant show all the consumers options in a table Instead can present graphically show indifference curvesConsumer indifference curvesSome properties of indifference curves Indifference curves are thin Indifference curves dont slope upwardsBetter than A bundles lie to the northeast of the indifference curves Worse than A bundles lie to the southwest of the indifference curveFamilies of Indifference curvesFamily of indiffe
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