Preferences & indifference curves

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Intros
Lessons
  1. Preferences & Indifference Curves Overview:
  2. Preference Maps & Indifference Curves
    • Graph of a person's preference
    • Combination of goods where consumer is indifferent
    • A family of indifference curves
  3. Marginal Rate of Substitution
    • Rate of giving up good y  \, for good x
    • Slope of the indifference curve
    • Steep indifference curve → MRS is high
    • Flat indifference curve → MRS is low
    • Diminishing marginal rate of substitution
  4. Degree of Substitutability
    • How close are the substitutes?
    • Different shapes of indifference curves
    • Ordinary Goods
    • Perfect Substitutes
    • Perfect Complements
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Examples
Lessons
  1. Understanding Indifference Curves & Marginal Rate of Substitution
    Consider the following Indifference Curves:
    Indifference Curves & Marginal Rate of Substitution
    1. If a consumer chooses 2 pizzas and 2 sodas, what is the marginal rate of substitution?
    2. If a consumer chooses 3 pizzas and 3 sodas, what is the marginal rate of substitution?
    3. Does the law of diminishing marginal rate of substitution apply?
  2. Consider the following Indifference Curves:
    Indifference Curves marginal rate of substitution
    1. If a consumer chooses 1 book and 2 movies, what is the marginal rate of substitution?
    2. If a consumer chooses 1 book and 5 movies, what is the marginal rate of substitution?
    3. Does the law of diminishing marginal rate of substitution apply?
  3. Understanding Ordinary Goods, Perfect Substitutes, & Perfect Complements
    Draw indifference curves for left shoes and right shoes.
    1. Draw indifference curves for instant coffee and coffee beans.
      1. Draw indifference curves for chocolate and vanilla.