Lernkarten

Karten 35 Karten 0 Lernende English Universität 06.06.2019 / 06.06.2019 Namensnennung - Nicht-kommerziell - Keine Bearbeitung (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?

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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

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The Marginal Rate of Substitution (MRS)

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Well behaved preferences

Monotonicity: more is preferred to less

Convexity: the average is preferred to extremes

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Perfect Complements

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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

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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