THE CONSUMER’S OPTIMAL CHOICES

THE CONSUMER’S OPTIMAL CHOICES Consider once again our Pepsi and pizza example. The consumer would like to end up with the best possible combination of Pepsi and pizza-that is, the combination on the highest possible indifference curve. But the consumer must...

FOUR PROPERTIES OF INDIFFERENCE CURVES

FOUR PROPERTIES OF INDIFFERENCE CURVES Because indifference curves represent a consumer’s preferences, they have certain properties that reflect those preferences. Here we consider four properties that describe most indifference curves. • Property 1: Higher...

PREFERENCES WHAT THE CONSUMER WANTS

PREFERENCES WHAT THE CONSUMER WANTS Our goal in this chapter is to see how consume make choices The budget constraint is one piece of the analysis: It shows what combination of goods the consumer can afford given his income and the prices of the goods. The...