6_UtilityFunctions_ToPost

6_UtilityFunctions_ToPost -...

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“I trust in nature for the stable laws of beauty and utility.  Spring shall  plant and autumn garner to the end of time.” – Robert Browning ECON 410 Utility Functions
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2 Class 6 - Utility Functions
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3 Class 6 - Utility Functions
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4 Class 6 - Utility Functions Complete A decision can be made Transitive Preference rankings are “consistent” Monotonicity More is better What does it mean if indifference curves are extremely bowed in? Strict Convexity Preference for diversity Good 2 Good 1 I 1
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Group-Clicker Question (P): Assuming these preferences, what might Good 1 and Good 2 be? 1 2 3 4 5% 4% 84% 7% I 1 Good 1 Good 2 1. Good 1: Coke Good 2: Pepsi 2. Good 1: Beer Good 2: Pizza 3. Good 1: Lamp Good 2: Light Bulb 4. Good 1: Salt shaker Good 2: Salt packet
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6 Class 6 - Utility Functions Complete A decision can be made Transitive Preference rankings are “consistent” Monotonicity More is better What does it mean if indifference curves are extremely bowed in? Strict Convexity Preference for diversity Good 2 Good 1 I 1
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7 Class 6 - Utility Functions Perfect Complements: Perfect Complements are goods that a consumer is interested in consuming only in fixed proportions.
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8 Class 6 - Utility Functions Complete A decision can be made Transitive Preference rankings are “consistent” Monotonicity More is better What does it mean if indifference curves are not bowed in (but not concave)? Strict Convexity Preference for diversity Good 2 Good 1 I 1
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Group-Clicker Question (1 pt): Which of the following statements is consistent with the tradeoff between the goods the individual is willing to make? I 1 Good 1 Good 2 1 2 3 4 0% 4% 95% 0% 1. She would be willing to give away some of Good 2 for free 2. She would be willing to give away some of Good 1 for free 3. No matter how many units of Good 2 she has, she is willing to trade 1 unit of Good 2 for 1 unit of Good 1. 4. When she has large amounts of Good 2, she’s willing to trade it for Good 1. When she has small amounts of Good 2, she is not.
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Class 6 - Utility Functions Complete A decision can be made Transitive Preference rankings are “consistent” Monotonicity More is better What does it mean if indifference curves are not bowed in (but not concave)? Good 2
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6_UtilityFunctions_ToPost -...

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