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Unformatted text preview: x ( p , w ) is called the demand func-tion . The domain of the demand function is K + 1 ++ whereas its range is K + . Example: Consider a consumer in a world with two commodities having the following lexicographic preference relation, attaching the rst prior-ity to the sum of the quantities of the goods and the second priority to the quantity of commodity 1: x y if x 1 + x 2 > y 1 + y 2 or both x 1 + x 2 = y 1 + y 2 and x 1 y 1 . This preference relation is strictly convex but not continuous. It induces the following noncontinuous demand function: x (( p 1 , p 2 ) , w ) = ( 0, w / p 2 ) if p 2 < p 1 ( w / p 1 , 0 ) if p 2 p 1 . We now turn to studying some properties of the demand function....
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This note was uploaded on 12/29/2011 for the course ECO 443 taught by Professor Aswa during the Fall '10 term at SUNY Stony Brook.
- Fall '10