Advanced Microeconomics Problem Set 1: Preference & Choice (Master Level)

Solution:

1.      (a). Rationality in preference and choice means that people would prefer to the thing which makes them satisfied instead of other things. It also can be said that these people are likely choosing goods and services in a rational way. When people make a decision, they will consider many factors which can maximize their satisfaction, compare them with the other and also use several information that they have and believe it would make the best decision and choice. There are two properties to describe it further:

1)  Completeness, assumes that there is one thing which would be chosen instead of other things. If there are two goods, let say xand y, people are going to choose x instead of y or vice versa.

2)  Transitivity is a consistent comparison and behaviour by people toward the goods or choices. For example, a student prefers to study instead of work and he is more likely to work than going long vacation, so therefore this student definitely likes to study instead of going long vacation.

(b). Example from everyday life that violates the property:

       - Completeness: If someone has to choose between the two very similar things, then each thing cannot be better off the other, because these are almost indifferent things for him. For example, croissant from bakery A and bakery B are at price, taste, quality, size and other indicators which could be regarded as indifferent, or are just slightly different. When someone is facing either choosing croissant from bakery A or bakery B, he is unable to make a decision quickly because he does not know what his real preference is, due to the “extremely slightly difference” of the choices.

       - Transitivity: It will be happened if the people are being to be inconsistent. For instance, someone like to eat bread with cheese instead of milk and he will use milk instead of chocolate, but he will choose chocolate instead of cheese, because he prefer to eat bread with a chocolate more than cheese.

So that, violation defines the inconsistent and irrational behaviour of the people (or in this case, the consumer).

Introduction to Algebra: Math Help Summary

1. Variables 
2. Expressions 
3. Equations 
4. Solution of an equation 
5. Simplifying equations 
6. Combining like terms 
7. Simplifying with addition and subtraction 
8. Simplifying by multiplication 
9. Simplifying by division 
10. Word problems as equations 
11. Sequences 

 

Which math courses?

Re-blogged from N. Gregory Mankiw's Blog, Proffesor at Harvard University and American Economist

In response to my previous post offering advice to aspiring economists, a student emails me:

Since the time allocation is limited, I can take only some math courses and the problem is that I am not sure which courses are most important for a successful economist and which course I should take first. Can you possibly suggest for me a list of math courses that a typical economics student should take step by step?

Here is one plan of action:

Calculus
Linear Algebra
Multivariable Calculus
Real Analysis
Probability Theory
Mathematical Statistics
Game Theory
Differential Equations