econ201.consumertheory

econ201.consumertheory - I II Individual Preferences and...

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I. Individual Preferences and behavioral postulates A. Economists are concerned with the consequences of the combined actions of individuals. However, the forthcoming behavioral postulates are specific to individual preferences. B. Behavioral preferences 1. People have preferences 2. More is preferred to less 3. People are willing to substitute 4. Marginal values are decreasing II. Valuation: we measure value by what one is willing to give up in order to obtain something. A. What is intrinsic value? Something that is valuable “in itself” or “for its own sake”. Life. B. We will maintain that an object cannot have value beyond what people are willing to pay for the right to control the object. C. Total Value: the total value of a quantity of a good to a consumer is the maximum amount of money that she is willing to pay in order to acquire a good. D. Also…The total value of a good to a consumer is the minimum amount of money she is willing to accept in order to give up the good.
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