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The 'More is Better' Assumption in Economic Models
In the study of individual choice, a common starting assumption is that 'more is better,' meaning a person's satisfaction increases if they acquire more of a desirable good, holding all else constant. Analyze the importance of this assumption for building basic economic models of consumer behavior. Furthermore, discuss at least two distinct real-world scenarios or types of goods for which this assumption might not be a valid representation of human preference.
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CORE Econ
Economics
Social Science
Empirical Science
Science
Economy
Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
Analysis in Bloom's Taxonomy
Cognitive Psychology
Psychology
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Condition for an Increasing Utility Function
An individual's well-being is determined by two desirable things: hours of free time and units of consumption. A fundamental assumption is that their well-being increases if they get more of one of these things without having less of the other. If this individual currently has a combination of 20 hours of free time and 100 units of consumption, which of the following new combinations would unambiguously result in a higher level of well-being based only on the information provided?
Preference Consistency Analysis
Evaluating a Utility Scenario
Consider an individual whose satisfaction depends on two desirable goods: apples and oranges. According to the principle that 'more is better', this individual can be equally satisfied with a bundle of 15 apples and 10 oranges as they are with a bundle of 15 apples and 11 oranges.
An individual's satisfaction depends on two desirable goods: weekly consumption () and daily hours of free time (). Their current situation is represented by the bundle (c=500, t=10). Match each of the following new bundles of goods to the statement that correctly describes the change in the individual's satisfaction relative to their current situation, based only on the principle that 'more is better'.
An individual's satisfaction is determined by the quantities of two desirable goods they consume: concert tickets and restaurant meals. They currently have a bundle A, consisting of 5 tickets and 10 meals. They are then presented with a new bundle B, consisting of 5 tickets and 12 meals. The level of satisfaction from bundle B will be ______ than the level of satisfaction from bundle A.
The 'More is Better' Assumption in Economic Models
Evaluating a Proposed Satisfaction Model
An individual's satisfaction is determined by two desirable goods: weekly hours of leisure and weekly income. Their current situation is Bundle X: 15 hours of leisure and $400 of income. Consider three alternative bundles: Bundle A (15 hours, $450), Bundle B (14 hours, $400), and Bundle C (16 hours, $350). Based only on the principle that more of a desirable good is better, which statement correctly describes the relationship between these bundles?
An individual's satisfaction is derived from two desirable goods: digital music albums and streaming movie subscriptions. Based only on the principle that having more of a desirable good is always better, arrange the following bundles from the one that provides the least satisfaction to the one that provides the most satisfaction.