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.  

Posted Date: 10/26/2012 2:36:12 AM | Location : United States

Ask an Expert

Related Discussions:- Axiom of completeness - ordinal theory, Assignment Help, Ask Question on Axiom of completeness - ordinal theory, Get Answer, Expert's Help, Axiom of completeness - ordinal theory Discussions

Write discussion on Axiom of completeness - ordinal theory
Your posts are moderated

Write your message here..

Related Questions

Money supply in the mauritian financial sytem, Question 1: Discuss the ... Question 1: Discuss the alternative theories of the demand for money and their relevance in specifying a demand for money function for a small island developing economy like

Tennis club, Suppose you belong to a tennis club that has a monthly fee of ... Suppose you belong to a tennis club that has a monthly fee of $75 and a charge of $5 per hour to play tennis.

Should US laws be changed to require a shorter work week and, One constrain... One constraint in our economy is time. As a society, we make choices about the allocation of time between work and other pursuits. In the US, most workers are eligible for overtime

Price level depends on current money supply and future, If the price level ... If the price level depends on both the current money supply and future expected money supplies, in order to stop a hyperinflation, a central bank may try to establish credibility b

Rice production is land intensive, If rice production is land intensive and... If rice production is land intensive and computer production is labor intensive, though both good require some land and labor, the two-good production possibilities frontier will c

What are forms of price ceiling to lead inefficiency, What are forms of pri... What are forms of price ceiling to lead inefficiency? Price ceilings frequently lead to inefficiency into the forms of: a. Ineffective allocation to consumers b. Wasted r

Interest rate risk, If interest rates increase, which would you rather be h... If interest rates increase, which would you rather be holding, long term or short term bond? Why? Which type of bond has the greater interest rate risk?

Relate overnight interest rates targets with money supply, Relate Overnight... Relate Overnight interest rates targets with money supply There are many ways to explain the important connection between the overnight interest rate target and the money suppl

Exam, 40 40

Optimal consumption choice, In our 2 period consumption savings model (with... In our 2 period consumption savings model (with no leisure, u(c1, c2), suppose interest income in period 2 is taxed at the rates, where 0 a) Write down period 1 and period 2 bu