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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
When two consumers have different preferences, they will have different marginal rates of substitution when evaluated at identical bundles.
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3. UTILITY THEORY: MODELING PREFERENCES AND TASTES
observe that Warren has a relatively stronger preference for bread compared to Smith, and Smith has a relatively stronger preference for wine than Warren. Exhibit 5. Two Consumers with Different Preferences Note: <span>When two consumers have different preferences, they will have different marginal rates of substitution when evaluated at identical bundles. Here, Warren has a relatively strong preference for bread because he is willing to give up more wine for another slice of bread than is Smith. Suppose that the slope of Warren’s indifference curve at point a is equal to −2, and the slope of Smith’s indifference curve at point a is equal to – 12 . Warren is willing


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