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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
The assumption of non-satiation ensures that, in an indifference curve, all bundles lying directly above, directly to the right of, or both above and to the right of point a must be preferred to bundle a.
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3. UTILITY THEORY: MODELING PREFERENCES AND TASTES
er bundles that contain only two goods so that we can use a two-dimensional graph to represent them—as in Exhibit 1, where a particular bundle containing W a ounces of wine along with B a slices of bread is represented as a single point, a. <span>The assumption of non-satiation (more is always better) ensures that all bundles lying directly above, directly to the right of, or both above and to the right (more wine and more bread) of point a must be preferred to bundle a. That set of bundles is called the “preferred-to-bundle-a” set. Correspondingly, all the bundles that lie directly below, to the left of, and both below and to the left of bundle a must


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