Satiation
"What will the Indifference Curve look like if satiation is added into the perfect substitute or perfect complement case?"
During the break of today's Micro theory lecture, I asked.
The lecturer thought for 30 seconds and said,
"Sometimes, in economics, some concepts are incompatible."
I got back to my seat. He was walking slowly around the stage, seemed to be contemplating.
During the break of today's Micro theory lecture, I asked.
The lecturer thought for 30 seconds and said,
"Sometimes, in economics, some concepts are incompatible."
I got back to my seat. He was walking slowly around the stage, seemed to be contemplating.
posted by Outlaw at 12:56 am
5 Comments:
Is it like a circle? ^^
I think when you talk about satiation you are talking about some monotonicity property of the utility function which in essence is something like the "more is preferred to less". But if we use a weaker version of monotonicity such as local non-satiation. Then I think there will be no change to the indifference curve of perfect substitute or perfect complement.
Oops, I guess I made a mistake about what you mean by satiation. Can you tell me more?
Ok, I have thought about it further. So, if satiation you talked about means violation of the local non-satiation assumption, then the indifference will become "think" and of course then a perfect substitute/complement can no longer be a substitute/complement. But I don't see there is any special concern here because even in the normal case, we do like to have the assumption of local non-satiation to give us a "regular" indifference curve. As such, this "incomptability" is not exclusive to the case of perfect substitute/complement.
To ken,
Yes, it is.
To catpapa,
Wait for the next post.
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