Consumer Preferences
The cardinal approach of utility uses an imaginary measure of satisfaction, utils. In the ordinal approach, consumer preferences refer to the ranking a consumer makes between different product bundles or baskets. A market basket is a collection of products a consumer can purchase. Two goods are taken in a basket to explain consumer preferences. For example, a market basket could have coffee and sandwiches.
Assumptions about Consumer Preferences
The following assumptions are made:
Completeness
It means that consumers can compare and rank all possible combinations of products, known as baskets. A consumer can definitively state their preference for any two baskets, say A and B. They might prefer basket A over B, B over A, or view them as equally desirable.
Monotonic Preferences or More is Better
It means that consumers prefer more of any good to less. For instance, if a consumer is comparing baskets of goods, under the monotonic preferences assumption, they would always prefer the basket with more quantity.
From Chapter 5:
Now Playing
Consumer Behavior
165 Views
Consumer Behavior
272 Views
Consumer Behavior
282 Views
Consumer Behavior
525 Views
Consumer Behavior
164 Views
Consumer Behavior
187 Views
Consumer Behavior
101 Views
Consumer Behavior
152 Views
Consumer Behavior
382 Views
Consumer Behavior
182 Views
Consumer Behavior
226 Views
Consumer Behavior
85 Views
Consumer Behavior
64 Views
Consumer Behavior
83 Views
Consumer Behavior
62 Views
See More
Copyright © 2025 MyJoVE Corporation. All rights reserved