Answer to Question #310679 in Microeconomics for vy tran

Question #310679
  1. A basic assumption about consumers in microeconomics is that they have preferences over different baskets of goods. Explain the concepts “preference”, “preference order”, and “basket of goods”.
1
Expert's answer
2022-03-14T13:15:47-0400

Preference affects consumer demand for goods. It is defined as some characteristics a consumer wants in a given commodity that’s preferable to him/her, such as satisfaction of the product.


Preference order refers to the alternatives or an array of options over the basket of goods. For example, for a given list of two products, there are chances the consumer prefers the first item over the second and vice versa.


A basket of goods refers to general goods produced continuously in an economy. For example, a mixture of a pack of cereals, dozens of tissue rolls is a basket of goods.

 


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