文档介绍：Chapter Five
Choice
选择
Structure
Rational constrained puting ordinary demands
Interior solution (内在解)
Corner solution (角点解)
“Kinky” solution
Example: Choosing taxes
Economic Rationality
The principal behavioral postulate is that a decision-maker chooses its most preferred alternative from those available to it.
The available choices constitute the choice set.
How is the most preferred bundle in the choice set located?
Rational Constrained Choice
x1
x2
Affordable bundles
More preferred bundles
Rational Constrained Choice
Affordable bundles
x1
x2
More preferred bundles
Rational Constrained Choice
x1
x2
x1*
x2*
Rational Constrained Choice
x1
x2
x1*
x2*
(x1*,x2*) is the most preferred affordable bundle.
Rational Constrained Choice
The most preferred affordable bundle is called the consumer’s ORDINARY DEMAND (一般需求)at the given prices and budget.
Ordinary demands will be denoted by x1*(p1,p2,m) and x2*(p1,p2,m).
Rational Constrained Choice
When x1* > 0 and x2* > 0 the demanded bundle is INTERIOR.
If buying (x1*,x2*) costs $m then the budget is exhausted.
Rational Constrained Choice
x1
x2
x1*
x2*
(x1*,x2*) is interior.
(x1*,x2*) exhausts the budget.