Re: Demand function

Posted by Asd1995 on Jun 14, 2017; 7:22am
URL: http://discussion-forum.276.s1.nabble.com/Demand-function-tp7605535p7605560.html

Problem here is you're comparing two situations and ignoring all other possibilities. You're saying the consumer will only consume x,y or w,z. However that may not be true.

If your condition on optimal x,y giving more utility than optimal w,z holds, it does not imply consuming x,y is overall optimal. It just says that consuming x,y and not any of w,z is "better" than consuming only w,z and no x,y. Obviously it does not mean that its the best choice.