Consumers

Microeconomic Analysis

Keep in Your mind

Economics is the study of relationships that shape/influence/determine the economy

This is an extremely broad set of relationships!

When we model consumers, we're thinking about modeling decisions that go beyond the typical setting of an individual purchases goods in a supermarket

We want to be able to model career decisions, saving decisions, geopolitical decisions

Fundamentals

Choice Set

\textcolor{blue}{\mathcal{X}}

The set that contains all possible options

For a college senior, it might be the set of jobs available to recent graduates

For a kid, it might be the set of baseball bats sold at a sporting goods store

For policy makers, it might be the fraction of income that individuals are required to pay for housing when using a voucher

Often, we'll find it easier to consider everyone having the same choice set

The constraint function

\textcolor{blue}{F} :: \mathcal{X} \to \{0, 1\}

Is a function that indicates whether a possible choice is feasible

Feasible

You have access to the technology which enables you to send a text message

You can afford to pay for the dinner at a restaurant

You are aware that certain housing options exists

In addition to income or financial constraints, people often face constraints related to access to technology and information