文档介绍：Lecture 2
Consumer Behavior
Autumn 2007
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Lecture2,Xinyu,02121010
Topics to be Discussed
Preferences and Utility
Budget Constraints
Consumer Choices
Cardinal Utility and Consumer Equilibrium
A Mathematical Treatment
Autumn 2007
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Lecture2,Xinyu,02121010
Consumer Behavior
There are three steps involved in the study of consumer behavior.
1) We will study consumer preferences.
To describe how and why people prefer one good to another.
Autumn 2007
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Lecture2,Xinyu,02121010
Consumer Behavior
There are three steps involved in the study of consumer behavior.
2) Then we will turn to budget constraints.
People have limited es.
Autumn 2007
4
Lecture2,Xinyu,02121010
Consumer Behavior
There are three steps involved in the study of consumer behavior.
3) Finally, we bine consumer preferences and budget constraints to determine consumer choices.
bination of goods will consumers buy to maximize their satisfaction?
Autumn 2007
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Lecture2,Xinyu,02121010
Preferences and Utility
A market basket (consumption bundle, bination) is a collection of one or more goods (“goods”).
One market basket may be preferred over another market basket containing a bination of goods.
Market Baskets and Goods
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Lecture2,Xinyu,02121010
Consumer Preferences
Preferences Relations
Four Basic Assumptions/Properties
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Consumer Preferences
1) Completeness
2) Transitivity
3) Desirability: Consumers always prefer more of any good to less.
4) Convexity
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Lecture2,Xinyu,02121010
Indifference Curves and Utility
Indifference curves represent binations of market baskets that provide the same level of satisfaction to a person.
Indifference Curves
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Indifference Curves and Utility
A 20 30
B 10 50
D 40 20
E 30 40
G 10 20
H 10 40
Market Basket Units of Food Units of Clothing
Autumn 2007
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Lecture2,Xinyu,02121010