ECON 3411 Lecture Notes - Lecture 23: Indifference Curve, Transitive Relation
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Consumer is capable of expressing preferences (or indifference) between all possi(cid:271)le (cid:271)undles. (cid:894)(cid:862)i don"t know(cid:863) is not an option! (cid:895). If the only bundles available to a consumer are a, b, and c, then the consumer is indifferent between a and c (they are on the same indifference curve). The consumer will prefer b to a. The consumer will prefer b to c. More is better property: bundles that have at least as much of every good and more of some good are preferred to other bundles. Bundle b is preferred to a since b contains at least as much of good y and strictly more of good x. Bundle b is also preferred to c since b contains at least as much of good x and strictly more of good y. More generally, all bundles on u2 are preferred to bundles on u1 or u0. And all bundles on u1 are preferred to u0.