Microeconomics I partie 8/9
Fiches de révisions
Fiches de révisions
Set of flashcards Details
| Flashcards | 35 |
|---|---|
| Language | English |
| Category | Macro-Economics |
| Level | University |
| Created / Updated | 06.06.2019 / 02.10.2023 |
| Licencing | Attribution-NonCommercial-NoDerivs (CC BY-NC-ND) (Unversité de Genève, cours de Pr. Monika Mrazova) |
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Which of the following utility functions could be used to represent David’s preference ordering?
Not the 3rd nor the 5th
Preferences axioms
I complete: any two bundles can be compared
I reflexive: any bundle is at least as good as itself X >= X
I transitive: if X >= Y and Y >= Z then X >= Z
Example for MRS
The Marginal Rate of Substitution (MRS)
Well behaved preferences
Monotonicity: more is preferred to less
Convexity: the average is preferred to extremes
Bad, neutral, satiation point, discrete
Perfect Complements
Goods that are always consumed together in fixed proportions (measured by the slope of the ray through the origin)
Only the number of pairs of units of the two commodities determines the preference rank-order of bundles
Perfect Substitutes
The consumer is willing to substitute one good for another at a constant rate (measured by the slope of the indifference
curves)
Only the total amount of the two commodities in bundles determines their preference rank-order
