Sunday, December 2, 2012
Reflections on Chapter 21: The Theory of Consumer Choice
I actually liked this chapter. I understand all of the applications and they make sense to me. The only part I was slightly confused about was the concept of multiple indifference curves. I didn't understand how a person could have numerous indifference curves for the exact same decision, when they only have one budge constraint curve. Why would there even be an indifference curve for an impossible budget. It's like they're assuming we all sit around thinking about decisions we would make if we had different budget constraints. Looking back I suppose the only reason those curves are present was to show us how changing the budget constraint would change our decisions. I was frustrated that when I tried to draw the graphs from the text, it was very difficult to draw the indifference curves so they lined up with the budget constraint curve in the right way to get the result of decreasing the quantity on the x-axis when the budget constrain curve rotated outward. Basically, I understand the concepts very well but I'd feel more confident if I could duplicate the models.
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