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1 results

  • 2 - Demand and Consumer Choice

  • from Part I - Introduction: Content, Structure, and Strategy of Mainstream Economics
  • Daniel M. Hausman, Rutgers University, New Jersey
  • Book:
    The Inexact and Separate Science of Economics
    Published online:
    25 May 2023
    Print publication:
    08 June 2023, pp 56-72

  • Summary

    Although the normative model of rationality discussed in the first chapter is central to microeconomics, microeconomics is a positive theory describing, predicting, and explaining actual choices and their consequences. This chapter presents generalizations concerning market demand for commodities and services and consumer choice theory, which by means of economic models explains and to some extent corrects the generalizations concerning market demand. It presents an example of a simple economic model, where a consumer faces a choice between bundles consisting of only two infinitely divisible commodities, and it makes preliminary comments on the apparent empirical anomalies consumer choice theory faces. In reflecting on the theory of consumer choice and the explanation of demand, many questions arise concerning the structure of economic theory and whether the propositions of economic theory are in accord with the evidence. The material here should be familiar to economists.