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six4 - Key issues Chapter 4 Consumer Choice 1 2 3 4...

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1 Chapter 4 Consumer Choice Key issues 1. properties of preferences 2. utility 3. budget constraint 4. consumer's constrained choice Tastes individual tastes (preferences) determine pleasure people derive from goods economists usually take tastes as given do not judge taste Individual decision making consumers face constraints on their choices consumers maximize their pleasure from consumption subject to constraints we want to predict behavior--not judge i Consumer’s problem consumer allocates money over goods: buys a bundle or market basket of goods 2 possible theories of consumer behavior maximizing behavior random behavior (next chapter) Assumptions about consumer preferences 1. completeness 2. transitivity 3. more is better
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