ECON281 Lecture 6: 6

• School: University of Alberta
• Department: Economics
• Course: ECON281
• Professor: Lorne Priemaza

Document Summary

Consumer theory attempts to explain why consumers make choices: one good or bundle of goods over another good or bundle of goods. Chapter 3 consumer preferences and the concept of utility. Basket (bundle) any combination of goods and services: 3 hot dogs, 2 pop and 1 ice cream, haircut, manicure and 20 min massage, 2 punches in the gut, 1 kick in the groin. Consumer preferences any ranking of two baskets. I prefer 2 hot dogs and a coke to a hot dog, coke and ice cream. 2) preferences are transitive: choices are consistent: If: a) a is preferred to b: a b, b) b is preferred to c: b c then, a) a is preferred to c: a c. 2) choices are transitive: i would rather see the movie star wars than tears and feelings. Therefore, i prefer oceans 13 to tears and feelings. (valid: ruth is hotter than victoria and susan is cuter than ruth.