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#cfa #cfa-level-1 #economics #microeconomics #reading-14-demand-and-supply-analysis-consumer-demand #section-3-utility-theory #study-session-4
Necessarily, axioms must be at some level inaccurate and incomplete representations of the phenomena we are trying to model. If that were not the case, the “model” would not be a simplification; it would be a reflection of the complex system we are attempting to model and thus would not help our understanding very much.
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3. UTILITY THEORY: MODELING PREFERENCES AND TASTES
hen we state these axioms, we are not saying that we believe them actually to be true in every instance, but we assume them for the sake of building a model. A model is a simplification of the real world phenomena we are trying to understand. <span>Necessarily, axioms must be at some level inaccurate and incomplete representations of the phenomena we are trying to model. If that were not the case, the “model” would not be a simplification; it would be a reflection of the complex system we are attempting to model and thus would not help our understanding very much. Finally, we usually assume that in at least one of the goods, the consumer could never have so much that she would refuse any more, even if it were free. This assumption is


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