ECON 50 Chapter 3: Econ 50 Chapter 3 reading
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Given any two consumption bundles (cid:4666)(cid:1876)(cid:2869),(cid:1876)(cid:2870)(cid:4667) and (cid:4666)(cid:1877)(cid:2869),(cid:1877)(cid:2870)(cid:4667) consumer can rank them. If consumer indifferent between two bundles, use symbol . If (cid:4666)(cid:1876)(cid:2869),(cid:1876)(cid:2870)(cid:4667) (cid:4666)(cid:1877)(cid:2869),(cid:1877)(cid:2870)(cid:4667) but not (cid:4666)(cid:1876)(cid:2869),(cid:1876)(cid:2870)(cid:4667) ~ (cid:4666)(cid:1877)(cid:2869),(cid:1877)(cid:2870)(cid:4667), then (cid:4666)(cid:1876)(cid:2869),(cid:1876)(cid:2870)(cid:4667) (cid:4666)(cid:1877)(cid:2869),(cid:1877)(cid:2870)(cid:4667) Pick certain bundle (cid:4666)(cid:1876)(cid:2869),(cid:1876)(cid:2870)(cid:4667) and shade in all consumption bundles weakly preferred to (cid:4666)(cid:1876)(cid:2869),(cid:1876)(cid:2870)(cid:4667) Bundles on the boundary of the set, the bundles consumer is indifferent to (cid:4666)(cid:1876)(cid:2869),(cid:1876)(cid:2870)(cid:4667), forms. Complete: assume any two different bundles can be compared. Reflexive: assume any bundle is at least as good as itself. One problem: show only bundles consumer perceives as being indifferent to. 3. 3: indifference curve each other, don"t show which ones are better or worse. Indifference curves representing different levels of preference cannot cross. Two goods perfect substitutes if consumer willing to substitute one good for the other at. For given change in good 1, how does good 2 have to change to make consumer. Given bundle (cid:4666)(cid:1876)(cid:2869),(cid:1876)(cid:2870)(cid:4667), add a little more good 1 to bundle (cid:4666)(cid:1876)(cid:2869)+(cid:1876)(cid:2869),(cid:1876)(cid:2870)(cid:4667)