chapter 3 Preferences 西方经济英文版教材.pptVIP

Course: Microeconomics Text: Varian’s Intermediate Microeconomics ;Last chapter we talk about what is affordable or feasible to consumers. This time we talk about preferences: what the consumer like more and what they like less. As a rational agent, a consumer chooses the option in the budget set that is highest in their preference order (i.e. one likes the most).;Preference Relations;Preference Relations;Preference Relations;Assumptions about Preference Relations;Indifference Curves;Indifference Curves;Indifference Curves;Indifference Curves;Indifference Curves;Indifference Curves;Indifference Curves;x2;When more of a commodity is always preferred, the commodity is a good. If every commodity is a good then indifference curves are negatively sloped. It is because when one has more of one good, one has to get less of another to make this bundle indifferent to the original one.;Slopes of Indifference Curves;If less of a commodity is always preferred then the commodity is a bad. e.g. rotten fruits; tobacco smoke (if you do not smoke) If one good is good and the other is bad, then the indifference curve would be upward sloping.;Slopes of Indifference Curves;If one just do not care about whether or how much to have a commodity, this is called a neutral good. E.g.: goods that you don’t use and do not care about their existence. If one commodity is neutral, the other is good, the indifference curve would be vertical / horizontal.;*;Extreme Cases of Indifference Curves; Perfect Substitutes;Extreme Cases of Indifference Curves; Perfect Substitutes;Extreme Cases of Indifference Curves; Perfect Complements;Extreme Cases of Indifference Curves; Perfect Complements;Extreme Cases of Indifference Curves; Perfect Complements;A bundle strictly preferred to any others is a satiation point or a bliss point. The satiation point is the best bundle. More of anything are not better. What do indifference curves look like for preferences exhibiting satiation?;Indifference Curves Exhibiti