Chapter 4. Consumer Choice Preferences Preferences Do not unto others as you would that they would do unto you. Their tastes may not be the same. ? George Bernard Shaw Economists assume that consumers have a set of tastes or preferences that they use to guide them in choosing between goods. Properties of Consumer Preferences Completeness: The consumer prefers the first bundle to the second, prefers the second to the first, or is indifferent between them Transitivity: Consumer preferences over bundles is consistent in the sense that, if the consumer prefers bundle z to bundle y and prefers bundle y to bundle x, the consumer also prefers bundle z to x. More is better: More of a commodity is better than less of it (A bad is something for which less is preferred.). Preference Maps Indifference curves for the bundles of pizzas and burritos Impossible Indifference Curves Midterm 1 September 16 (Wed) Lectures 1-9, Chapters 1-4 (p. 85) Help Session on September 15 (Tue) Time ?
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