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1、CHAPTER3OUTLINE3.1ConsumerPreferences3.2BudgetConstraints3.3ConsumerChoice3.4RevealedPreference3.5MarginalUtilityandConsumerChoice3.6Cost-of-LivingIndexesConsumerBehavior●theoryofconsumerbehaviorDescriptionofhowconsumersallocateincomesamongdifferentgoodsandservicestomaximizetheirwell-being.Co
2、nsumerbehaviorisbestunderstoodinthreedistinctsteps:ConsumerpreferencesBudgetconstraintsConsumerchoicesCONSUMERPREFERENCES3.1MarketBaskets●marketbasket(orbundle)Listwithspecificquantitiesofoneormoregoods.TABLE3.1AlternativeMarketBasketsA2030B1050D4020E3040G1020H1040MarketBasketUnitsofFoodUnits
3、ofClothingToexplainthetheoryofconsumerbehavior,wewillaskwhetherconsumerspreferonemarketbaskettoanother.CONSUMERPREFERENCES3.1SomeBasicAssumptionsaboutPreferencesCompleteness:Preferencesareassumedtobecomplete.Inotherwords,consumerscancompareandrankallpossiblebaskets.Thus,foranytwomarketbaskets
4、AandB,aconsumerwillpreferAtoB,willpreferBtoA,orwillbeindifferentbetweenthetwo.Byindifferentwemeanthatapersonwillbeequallysatisfiedwitheitherbasket. Notethatthesepreferencesignorecosts.Aconsumermightprefersteaktohamburgerbutbuyhamburgerbecauseitischeaper.CONSUMERPREFERENCES3.1SomeBasicAssumpt
5、ionsaboutPreferencesTransitivity:Preferencesaretransitive.TransitivitymeansthatifaconsumerprefersbasketAtobasketBandbasketBtobasketC,thentheconsumeralsoprefersAtoC.Transitivityisnormallyregardedasnecessaryforconsumerconsistency.Moreisbetterthanless:Goodsareassumedtobedesirable—i.e.,tobegood.C
6、onsequently,consumersalwaysprefermoreofanygoodtoless.Inaddition,consumersareneversatisfiedorsatiated;moreisalwaysbetter,evenifjustalittlebetter.Thisassumptionismadeforpedagogicreasons;namely,itsimplifiesthegraphicalanalysis.Ofcourse,somegoods,suchasairpollution,maybeundesirable,andconsumerswi
7、llalwayspreferless.Weignorethese“bads”inthecontextofourimmediatediscussion.DescribingIndividualPreferencesBecausemoreofeachgoodispreferredtoless,wecancomparemarketbasketsintheshadedareas.BasketAisclearlypreferredtobasketG,whileEisclearlyprefe
