review for econ

review for econ - Chapter 4 Preferences Properties of...

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Chapter 4: Preferences Properties of consumer preferences 1. Completeness: When choosing between any 2 bundles, a consumer will prefer the first to  the second, the second to the first, or will be indifferent. Thus, there will be no room for  illogic or indecision. 2. Transitivity: If a consumer weakly prefers Bundle z to Bundle y, and Bundle y to Bundle  x, then the consumer prefers Bundle z to Bundle x. Thus a consumer’s preferences over  bundles are consistent. 3. More is better: but only more of both goods, not just more of one Indifference curve: set of all bundles of goods that a consumer views as being equally desirable Properties of indifference curves 1. Bundles on indifference curves farther from the origin are preferred to those on  indifference curves close to the origin a. More is better-contradiction 2. There is an indifference curve through every possible bundle a. Completeness property: the consumer can compare any bundle to another so  connecting the bundles to which a consumer is indifferent produces an  indifference curve 3. Indifference curves cannot cross a. Because transitivity doesn’t hold in accordance with more-is-better
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review for econ - Chapter 4 Preferences Properties of...

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