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2.1
They have consistent preferences. They seek to maximize preferences. They are willing to make tradeoffs between different goods.
2.2
Completeness Assumption:
Given
2.3
2.4
Transitivity Assumption:
Given
any three bundles: - If bundle 1 is at least as good as bundle 2 and bundle 2 is at least as good as bundle 3, then bundle 1 is at least as good as bundle 3.
2.5
Non-satiation Assumption:
Given
any two bundles, if bundle 1 contains more of one good than bundle 2, and it does not contain less of the other good, then bundle 1 is preferred to bundle 2.
2.6
Maximization Assumption:
Individuals
2.7
2.8
Continuity Assumption
Through
any consumption bundle in which the quantity of at least one good is positive, there is a continuous indifference curve.
2.9
2.10
2.11
2.12
2.13
2.14
2005 Pearson Education Canada Inc.
2.15
that in Figure 2.7 the MRS diminishes in a movement down the indifference curve. A person whose preferences are shown in Figure 2.7 is less willing to substitute good 2 for good 1 at point B than at point A.
2.16
2.17
2.18
2.19
2.20
2.21
2.22