ECON101: Principles of Microeconomics

4.2: Consumer Preferences and Consumer Choice

• Principles of Microeconomics: "Chapter 7, Section 3: Indifference Curve Analysis: An Alternative Approach to Understanding Consumer Choice"

  Read this section to learn about indifference analysis. Attempt the "Try It” problems at the end of the section before checking your answers.
  

• MIT OpenCourseWare: Jon Gruber's "Preference and Utility" Page

  Watch this lecture for an explanation of consumer theory, and especially mathematical representations of consumer preferences.

• MIT OpenCourseWare: Jon Gruber's "Labor Supply" and "Child Labor" Page

  Watch these two lectures for an explanation of labor analysis.
  

• 4.2.1: Consumer Theory and Indifference Curves

  • Khan Academy: "Equalizing Marginal Utility per Dollar Spent" Page

    Watch this video about equalizing marginal utility per dollar spent.
    

  • Khan Academy: "Types of Indifference Curves" Page

    Watch this video about the types of indifference curves.
    

  • Khan Academy: "First Degree Price Discrimination" Page

    Watch this video about first degree price discrimination.
    

  • Wolfram Demonstrations Project: "Changes in the Budget Line"

• 4.2.2: Utility Maximization

  The optimal consumer choice in the indifference curve analysis is determined by the tangency condition between the marginal rate of transformation (MRT) and the marginal rate of substitution (MRS).
  

  • Khan Academy: "Optimal Point on Budget Line" Page

    Watch this video about the optimal point on a budget line.
    

• 4.2.3: Elasticity

  • Boundless: "Defining Price Elasticity of Demand" Page

    Read this section about price elasticity.