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Midterm 1 Notes - another set of numbers in a way that...

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Chapter 3 - Preferences Strictly, weekly prefer, indifferent Axioms of Consumer Theory o Complete – any two bundles can be compared o Reflexive – a bundle is at least as good as itself o Transitive Well-behaved preferences o Monotonicity – more is better (negative slope) o Combinations are preferred to extremes – strictly convex indifference curve Chapter 4 – Utility Monotonic transformation – a way of transforming one set of numbers into
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Unformatted text preview: another set of numbers in a way that preserves the order of the numbers • Level set – the set of all (x1,x2) where u(x1,x2) is constant Chapter 2 – Budget Constraint • Composite good – a good that stands for all other goods • Numeraire – when you set the price of one good to 1 (that price) • Ad valorem – value taxes...
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