Consumer theory and the Rotterdam model

This chapter, the longest in the book, explains the fundamentals of microeconomics and its application to the analysis of health and healthcare. The concepts of scarcity and opportunity costs lie at the heart of the economics discipline. Based on the standard production function with two input factors, the important concept of cost-efficiency is explained; and based on the premise of scarcity in the availability of input factors, the concept of opportunity costs is explained. An important insight from consumer theory is that people make trade-offs. Their preferences and income determine their chosen combination of goods, as illustrated by an indifference curve. An important piece of information for policymakers attempting to intervene in people’s demand for healthy, and unhealthy, goods is to know how sensitive demand is to changing prices and income. The chapter explains and defines elasticities of demand.

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Appendix C. An Overview of Basic Consumer Theory

Pricing Credit Products ◽

10.1515/9781503605657-014 ◽

2020 ◽

pp. 213-218

Keyword(s):

Consumer Theory ◽

Basic Consumer

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IN PURSUIT OF CONSUMER THEORY

Decision Sciences ◽

10.1111/j.1540-5915.1970.tb00765.x ◽

1970 ◽

Vol 1 (1-2) ◽

pp. 25-39 ◽

Cited By ~ 6

Author(s):

LEONARD L. BERRY ◽

JOHN H. KUNKEL

Keyword(s):

Consumer Theory

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Introduction to Formal Preference Spaces

Formalized Mathematics ◽

10.2478/forma-2013-0024 ◽

2013 ◽

Vol 21 (3) ◽

pp. 223-233

Author(s):

Eliza Niewiadomska ◽

Adam Grabowski

Keyword(s):

Binary Relation ◽

Preference Relation ◽

Consumer Preference ◽

Consumer Theory ◽

Mathematical Economics ◽

Characteristic Relation ◽

Finite Set ◽

Preference Structures ◽

Equal Interest

Summary In the article the formal characterization of preference spaces [1] is given. As the preference relation is one of the very basic notions of mathematical economics [9], it prepares some ground for a more thorough formalization of consumer theory (although some work has already been done - see [17]). There was an attempt to formalize similar results in Mizar, but this work seems still unfinished [18]. There are many approaches to preferences in literature. We modelled them in a rather illustrative way (similar structures were considered in [8]): either the consumer (strictly) prefers an alternative, or they are of equal interest; he/she could also have no opinion of the choice. Then our structures are based on three relations on the (arbitrary, not necessarily finite) set of alternatives. The completeness property can however also be modelled, although we rather follow [2] which is more general [12]. Additionally we assume all three relations are disjoint and their set-theoretic union gives a whole universe of alternatives. We constructed some positive and negative examples of preference structures; the main aim of the article however is to give the characterization of consumer preference structures in terms of a binary relation, called characteristic relation [10], and to show the way the corresponding structure can be obtained only using this relation. Finally, we show the connection between tournament and total spaces and usual properties of the ordering relations.

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