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Non-satiation
#cfa #cfa-level-1 #economics #microeconomics #reading-14-demand-and-supply-analysis-consumer-demand #section-3-utility-theory #study-session-4
Clearly, for some things, more is worse, such as air pollution or trash. In those cases, the good is then the removal of that bad, so we can usually reframe our model to accommodate the non-satiation assumption.
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3. UTILITY THEORY: MODELING PREFERENCES AND TASTES
e 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 sometimes referred to as the “more is better” assumption or the assumption of non-satiation . <span>Clearly, for some things, more is worse, such as air pollution or trash. In those cases, the good is then the removal of that bad, so we can usually reframe our model to accommodate the non-satiation assumption. In particular, when we later discuss the concept of risk for an investor, we will recognize that for many, more risk is worse than less risk, all else being equal. In that analysis, we


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