00:07
So we're looking at utility theory.
00:09
So it's a framework used in economics to analyse and understand individual preferences and choices.
00:14
And so it's based on the concept of utility.
00:17
And this represents the satisfaction or the happiness that an individual experiences from consuming goods or from consuming services.
00:27
And so there's several assumptions in place.
00:29
So firstly, we've got completeness.
00:32
So this assumption suggests that the individual can rank or compare all possible combinations of goods and services in terms of their preference.
00:44
And so for any two bundles of goods, a person is able to express a clear preference for one over the other.
00:52
And then we've got transitivity.
00:59
So transitivity, this assumes that if a person prefers bundle a over b and prefers b over c, then the person must also prefer a over c.
01:08
And so this assumption ensures that preferences are logically consistent and don't lead to contradictions.
01:13
And then we've got the idea of more is better.
01:17
So this assumption states that more of a good is preferred to less...