market baskets (bundles)  group of goods
 how/why consumers decide how much of each good to buy

assumptions about preferences  consumers often behave erratically, but assumptions must be made for models
 completeness  all goods are ranked (either above/below, or tied for a rank)
 transitivity  if A preferred to B and B preferred to C, then A preferred to C
 more > less  consumers always want more for less
indifference curve  all combinations of market baskets providing same satisfaction
 matches up market baskets where there’s more of 1 good and less of another from the preferred basket
 market baskets above/right of curve is preferred to any basket on curve
 must slope downward (or else violates assumption that more > less)
 consumer is indifferent between baskets A, B, or C, since they lie on the same indifference curve
 A, B, C preferred to basket E, not as preferred as basket D
 baskets on an indifference curve have more of 1 good but less of another when compared to other baskets on the curve

indifference map  describes preference for all combinations
 set of indifference curves, can’t intersect

marginal rate of substitution  max amount of 1 good that consumer is willing to give up for 1 extra unit of another good
 calculated w/ respect to vertical axis
 convex indifference curves >> decreasing marginal rate of substitution
 perfect substitute >> linear line graph >> constant marginal rate of substitution
 if 1 good is the same as another, it doesn't matter how many of each you have
 only the total number matters
 U = A + B
 perfect complement >> need both to gain satisfaction >> right angle graph
 ex. buying left/right shoes
 it doesn't matter how many right shoes you have if you don't have a left shoe to match
 consumer indifferent between a basket containing 1 right and 1 left shoe and another basket containing 1 right and 15 left shoes
 U = min(A,B)
utility function  assigns numerical values to market baskets