MONOTONIC PREFERENCES OF THE CONSUMER

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 Learning Contents:                                                            

·         Monotonic Preferences of the consumer 

Monotonic Preferences:

We always know that a rational consumer always prefers to have more of a good as it would give him a higher level of satisfaction. In other words, we can say that a consumer will always love to pick that basket of goods that has more articles as it will give him a higher level of satisfaction. The assumption of monotonic preferences means that more is better no matter how much more.

                                                                   Or

Monotonic preferences means that a consumer will always prefer that bundle of goods that will have at least more of one good and no less of the other as it gives him a higher level of satisfaction.

Example 1: (8, 8) (8, 9)

In the above two bundles if the consumer's preferences are monotonic he will choose bundle (8, 9) as there is more of one of the good and no less of the other.

Example 2: A consumer has to choose among three bundle options having two different types of goods say clothes and shoes. The different bundle's options are (10, 10) (10, 9) (9, 9).

Which among the following bundle a consumer would prefer and why?

1.      The most preferred bundle would be (10, 10).

2.      Consumer's second preferred bundle would be (10, 9)

3.      The third preferred bundle would be (9, 9).

 

 The  first combination offers a higher level of satisfaction, and the consumer must prefer it to the other.

Example 3: If a consumer has monotonic preferences, can he be indifferent between the bundles (10, 9) (8, 5)?

No, if a consumer has monotonic preferences then bundle (10,9) is preferred to bundle(8,6) as a bundle (10,9) has more of both goods.

Example 4: Suppose your friend is indifferent to the bundles (5, 6) and (6, 6). Are the preferences of your friend monotonic?

No. These preferences are not monotonic. If a consumer has monotonic preferences, he would prefer the bundle (6, 6) to the bundle (5, 6) because the bundle (6, 6) has more of Good-1 as compared to the bundle (5, 6).

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