3.1 Preferences
Do not do unto others as you would that they would do unto you. Their tastes may not be the same.
—George Bernard Shaw
We start our analysis of consumer behavior by examining consumer preferences. Using three assumptions, we can make many predictions about people’s preferences. Once we know about consumers’ preferences, we can add information about the constraints that consumers face so that we can answer many questions, such as the ones posed at the beginning of the chapter, or derive demand curves, as we do in Chapter 4.
As a consumer, you choose among many goods. Should you have ice cream or cake for dessert? Should you spend most of your money on a large apartment or rent a single room and use the money you save to pay for ...
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