ECON 1 Chapter 160-161,162-169: Utility and Demand (Reader 160-161,162-169) for Lecture M,10/15
85
ECON 1 Full Course Notes
Verified Note
85 documents
Document Summary
2 thecomparisons are logicallyconsistent ortransitive e9 youprefer asportscar to ajeepand ajeepto a motorcycle thenweassumethatyouwillalsoperferasports car to a motorcycle. Indifferencecurve a curve representing all combinationsoftwogoodsthatmaketheconsumerequallywelloff eg maxis indifferentbetweenpointgandpointh andbetweenpointhandpoint j solongasheisrational. G number ofmovies permonth hemustbeentirelyindifferentamong all threepoints g h and i since allthreegivehimthesamelevelofsatisfaction n b. Max"s indifferencecurves an g k i a a i j l i i y. Marginalrateofsubstitution nirsg x themaximumamountofgoody aconsumerwouldwillinglytradeforonemore unit ofgood x also theslop of a segmentofan indifference curve eg wemovealongthe indifferencecurvefrom point a topointl hewouldwillinglygiveup 17movies toget 4 moreconcerts sohisnirswouldbe 17 4 44 g h number ofmovies permonth. Max"s indifferencecurves b s a a i j i i t. The1111125 at anypointonthe indifference curve isequaltothe absolutevalueof theslopeofthecurve at that point when measured at apoint themrsy tellsus themaximumrateatwhich aconsumerwouldwillinglytradegoody for a tinybit moreofgood. Indifference map a set of indifference curvesthatrepresentan individual"spreferences. Utility a quantitive measure ofpleasure or satisfactionobtainedfromconsuminggoodsand services higher indifference curves providegreaterutilityfor a consumer thanlower indifference curves.
