Axiom of completeness - ordinal theory, Macroeconomics

Assignment Help:

Axiom of completeness:

Consumer's choice is complete. Implication: Since consumer is rational, she must have a unique preference relation. That means the consumer choice is either x1Rx2 or x2Rx1. Alternatively, consumer's choice is consistent or comparable. For unique preference relation, consumer choice must be transitive, where transitivity implies that if x1Rx2 and x2Rx3 then x1Rx3, where x3 is another commodity. 

Axiom of continuity: Consumer's preference relation (R) is continuous.

Axiom of non-satiation: Consumer's choice is non-satiated in all goods. Implication: Non-satiation means larger the consumption of a good leads to larger satisfaction or utility or lower the consumption lower is the satisfaction or utility. Non-satiation of all goods (which means "goods are good" or "more is better") means any commodity bundle 'A' is preferred over another commodity bundle 'B' only if bundle 'A' consists larger quantity of at least one good and no less quantity of any other goods. Notationaly if A>B, then A is preferred over B or APB where B is any other commodity bundle. 

Axiom of convexity: Consumer choice is such that indifference curve is strictly convex to the origin (i.e., utility function is quassi-concave). 

Axiom of selfishness: Consumer choice is selfish. 

Implication: Consumer's choice is self-guided. It is not influenced by any other consumer.  


Related Discussions:- Axiom of completeness - ordinal theory

Define economics, What is the study of economics about?

What is the study of economics about?

Individual stocks return is normally distributed, Suppose that an individua...

Suppose that an individual stock's return is normally distributed with a mean of 9% and a standard deviation of 4%. What is the probability that the stock's return will be less tha

When ochratoxin molds can occur, Q. When Ochratoxin molds can occur? Oc...

Q. When Ochratoxin molds can occur? Ochratoxin A is a phenylalanyl derivative of a substituted isocoumarin produced by Penicillium verrucosum in temperate climate and by severa

Economic growth cyclic fluctuations, Economic Growth Cyclic Fluctuations ...

Economic Growth Cyclic Fluctuations At this stage, it is useful for us to understand the difference between economic growth and cyclical fluctuations. Economic Growth Econo

Policy position by utilizing the examples, While referring to the "EYE on Y...

While referring to the "EYE on YOUR LIFE" section on page 183 of the textbook, apply this concept to your life. Develop your own policy position on price floors and price ceilings.

The circular flow of income in an open economy, The circular flow of income...

The circular flow of income in an open economy   An open economy is one in which international trade exists. Assume also that there is government spending and taxation. Thus

Opportunity set, constructing a opportunity set and budget line for $15 lot...

constructing a opportunity set and budget line for $15 lottery ticket and intending on buying a candy bar for $0.75 and peanut bag for $1.50

INFLATION-UNEEMPLOYMENT TRADE-OFF UNDER ADAPTIVE EEX, Explain how inflation...

Explain how inflation unemployment trade-off is not feasible under adaptive expectation.MEC002

Keynesian consumption function, How would I solve and graph this problem C=...

How would I solve and graph this problem C=$1 (trillion)+.80Yd

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd