1- utility & pref

Question 1

model of consumer behaviour premises

Answer 1

• preference determines pleasure derived from g&s consumed
• constraints faced on choices
• maximise wellbeing / pleasure subject to constraints

Question 2

good a ≻b

Answer 2

strict preference

Question 3

good a ≿ b

Answer 3

weak preference

Question 4

good a ∼ b

Answer 4

indifference

Question 5

assumptions about preferences

Answer 5

completeness, transitivity, monotonicity

Question 6

completeness

Answer 6

consumers rank bundles when choosing btw them

Question 7

transitivity

Answer 7

consumer rankings logically consistent in the sense that if a ≻b, and b ≻c, then a ≻c

Question 8

monotonicity

Answer 8

more is better (excluding bads such as pollution)

Question 9

indifference curve

Answer 9

all bundles of goods viewed as equally desirable

Question 10

Ic curve properties

Answer 10

farther from origin preferred, IC curves cannot: cross, slope downwards, be thick

Question 11

pros of mathematical models

Answer 11

rigorous, cohesive, refutable, practical

Question 12

cons of mathematical models

Answer 12

strong simplifying assumptions often made

Question 13

can utilities of diff consumers be compared

Answer 13

no- U function of each consumer is different