Consumer Prefrences -- Completeness, transitivity, nonsaatiation

Chap 3 microecon notes on consumer preferences -- Completeness, transitivity, nonsatiation 

 

Economists make 3 assumptions about typical consumer preferences

1. Completeness -- assume preferences are complete, consumers can rank order all market baskets
2. Transitivity --  preferences are transitive --> if consumer prefers A to B and B to C then the consumer prefers A to C
3. Nonsatiation -- consumer is presumed to prefer more of any good to less

There are exceptions to these assumptions

 

example---> the assumption of transitivity has been found less likely to hold the younger the consumer

 

Some goods less will be preferred to more --> for goods like pollution consumers will prefer less of the good over all ranges of consumption --> such commodities are called economic "bads"

 

Posted via email from Jim Nichols