ECON 101 Lecture Notes - Lecture 10: Consistency

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18 Nov 2020
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Rational consumer: that individuals know what they want and seek to make the most of the available opportunities given the scarcity constraints they face. Notion that people have preferences: defines what they want to consume. Notion that people have constraints: defines what they can consume. Utility: choices people make so as to maximize their well-being. The first concept is that individuals have preferences; i. e. , we assume that individuals can look at two alternatives and state either that they prefer one alternative over the other. Or that they are entirely indifferent between the two alternatives (i. e. , they like them equally) It is assumed that these preferences are logically consistent. If the individual says they prefer apples to oranges and they say they prefer oranges to peaches, then they will prefer apples to peaches. That individual preferences can (or should) be compared.

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