MGT 621 Microeconomics

 

1. Theory of Choice

 

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          Lecture Notes (Overheads Used In Class)

       Lecture 1 - Slides

 

 

Reading (Preparation)

       Pindyck/Rubinfeld, Ch. 3

 

 

Questions (Preparation)

       Think about the decision of buying a car or a bicycle: Write down a choice set X with at least 5 different elements.

       Describe your preferences by defining a complete partial order over all options in X.

       Draw iso-utility curves between options you are indifferent over.

       Which of these options can you afford? Mark the corresponding subset B of X.

       Determine your best affordable choices.

       Represent your preferences on X using a utility function u:XR.

       Describe the above decision process in terms of a utility maximization problem.

 

Background Reading (for future reference only)

       Debreu, G. (1959) Theory of Value: An Axiomatic Analysis of Economic Equilibrium, Yale University Press, New Haven, CT; Ch. 1.

       Kreps, D.M. (1988) Notes on the Theory of Choice, Westview Press, Boulder, CO; Chs. 13.