Lecture Notes for ECON 302 - Inter Microeconomic Theory at Illinois (UIUC)

Notes Information

Material Type:Note 17
Class:ECON 302 - Inter Microeconomic Theory
University:University of Illinois - Urbana-Champaign
Term: 2007
  • Indifference Curves
  • Preferences
  • Observation
  • Indifference Curve
  • Combination
  • Indifferent
  • Consequence
  • Marginal Rate
  • Consumption
  • (to/for) Him/it
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LECTURE 17 CONSUMER PREFERENCES 2 QUESTIONS, ISSUES AND TOPICS TO BE COVERED: - For a quantitative analysis of consumer behavior, one needs to convert consumer preferences into a mathematical form. How can this be accomplished? Is this always possible? - Can consumer preferences be also represented in a graphical manner? If so, then how can this be conceptually accomplished? 3 - What information does the shape of the indifference curves convey about the nature of preferences? 4 SKILLS TO BE MASTERED: - Understanding the implications of indifference curve shapes for consumer preferences. - Computing the Marginal Rate of Substitution between two goods. 5 INTRODUCTION Observation: Any economic model has at its heart one or more individuals. Therefore: It is important to study models that describe an individual and his behavior. 6 EXAMPLES OF INDIVIDUAL CHOICE i. How much of a given product to consume. ii. How much of a given product to produce. (managers/firms) iii. How many ...

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