43 econ

43 econ - 20:44 Ch.3

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
20:44 Ch. 3 theory of consumer behavior     Description of how consumers allocate  incomes among different goods and services to maximize their well-being. Consumer behavior is best understood in three distinct steps: 1.Consumer preferences 2.Budget constraints 3.Consumer choices 3.1 market basket  (or  bundle )      List with specific quantities of one or more  goods. Basic Assumptions of Preferences: Completeness- Preferences are assumed to be  complete . In other words,  consumers can compare and rank all possible baskets.  You prefer A to B, or prefer B to A, or will be indifferent between the two (equally  satisfied) 2. Transitivity-Consistent on how you rank preferences  Transitivity means that if a consumer prefers basket  to basket  and basket  to basket  C , then the consumer also prefers  to  C . 3. More is better than less: , 
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 4

43 econ - 20:44 Ch.3

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online