Clothing (Units per week) Food Indifference Curves Cannot Cross (Units per week) If indifference curves U and U2 intersect ()one of the assumptions of consumer theory is violated.According to this diagram,the consumer should be indifferent among market baskets A,B,and D.Yet B should be preferred to D because B has more of both goods
D B A U1 U2 Food (Units per week) Clothing (Units per week) Indifference Curves Cannot Cross If indifference curves U1 and U2 intersect (相交), one of the assumptions of consumer theory is violated. According to this diagram, the consumer should be indifferent among market baskets A, B, and D. Yet B should be preferred to D because B has more of both goods
3.1.4 The marginal rate of substitution The marginal rate of substitution(MRS)of F for C is the maximum amount of C that a person is willing to give up to obtain one additional unit of F.Namely, MRS=-△C/△F Clothing (Units per week) .60.。 △R Food(Units per week) The MRS diminishes as we move down along an indifference curve. When there is a diminishing MRS,preferences are convex
3.1.4 The marginal rate of substitution ❑ The marginal rate of substitution(MRS)of F for C is the maximum amount of C that a person is willing to give up to obtain one additional unit of F. Namely, MRS = -△C/△F Clothing (Units per week) Food (Units per week) The MRS diminishes as we move down along an indifference curve. When there is a diminishing MRS, preferences are convex. △C △F
3.1.5 Perfect Substitutes and Perfect Complements >Perfect substitutes-Two goods for which the marginal rate of substitution of one for the other is a constant. Perfect complements-Two goods for which the MRS is infinite, the indifference curves are shaped as right angles. Apple (a)Perfect Substitutes Left (b)Perfect Complements Shoes Juice (glasses) 3 2 Orange Juice(glasses) Right Shoes Perfect Substitutes and Perfect Complements
➢ Perfect substitutes-Two goods for which the marginal rate of substitution of one for the other is a constant. ➢ Perfect complements-Two goods for which the MRS is infinite, the indifference curves are shaped as right angles. Left Shoes Orange Juice(glasses) Right Shoes Apple Juice (glasses) 1 2 3 2 1 0 Perfect Substitutes and Perfect Complements (a) Perfect Substitutes (b) Perfect Complements 3.1.5 Perfect Substitutes and Perfect Complements
In (a),Bob views Orange Juice and Apple Juice as perfect substitutes:he is always indifferent between a glass of one and a glass of the other. In (b),Jane views left shoes and right shoes as perfect complements:an additional left shoe gives her no extra satisfaction unless she also obtains the matching right shoe
In (a), Bob views Orange Juice and Apple Juice as perfect substitutes: he is always indifferent between a glass of one and a glass of the other. In (b), Jane views left shoes and right shoes as perfect complements: an additional left shoe gives her no extra satisfaction unless she also obtains the matching right shoe
Styling Styling Performance Performance (a) (b) Preferences for Automobile Attributes Preferences for automobile attributes can be described by indifference curves. Each curve shows the combinations of performance and styling that give the same satisfaction. Consumers in(a)are willing to give up a considerable amount of styling for additional performance. The opposite is true for consumers in(b)
Styling Performance Performance Styling Preferences for Automobile Attributes (a) (b) Preferences for automobile attributes can be described by indifference curves. Each curve shows the combinations of performance and styling that give the same satisfaction. Consumers in (a) are willing to give up a considerable amount of styling for additional performance. The opposite is true for consumers in (b)