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Non‑convex sets have been incorporated in the theories of general economic equilibria, [2] of market failures, [3] and of public economics. [4] These results are described in graduate-level textbooks in microeconomics , [ 5 ] general equilibrium theory, [ 6 ] game theory , [ 7 ] mathematical economics , [ 8 ] and applied mathematics (for ...
Concave preferences are the opposite of convex, where when , the average of A and B is worse than A. This is because concave curves slope outwards, meaning an average between two points on the same indifference curve would result in a point closer to the origin, thus giving a lower utility. [ 25 ]
A set of convex-shaped indifference curves displays convex preferences: Given a convex indifference curve containing the set of all bundles (of two or more goods) that are all viewed as equally desired, the set of all goods bundles that are viewed as being at least as desired as those on the indifference curve is a convex set.
Right graph: With fixed probabilities of two alternative states 1 and 2, risk averse indifference curves over pairs of state-contingent outcomes are convex. In economics and finance, risk aversion is the tendency of people to prefer outcomes with low uncertainty to those outcomes with high uncertainty, even if the average outcome of the latter ...
In economics, non-convexity refers to violations of the convexity assumptions of elementary economics.Basic economics textbooks concentrate on consumers with convex preferences (that do not prefer extremes to in-between values) and convex budget sets and on producers with convex production sets; for convex models, the predicted economic behavior is well understood.
Convex preferences imply that the indifference curves cannot be concave to the origin, i.e. they will either be straight lines or bulge toward the origin of the indifference curve. If the latter is the case, then as a consumer decreases consumption of one good in successive units, successively larger doses of the other good are required to keep ...
Oxford Economics also puts the probability of a recession at its lowest level in over two years. That’s due to a surge in leading indicators that suggest strong momentum heading into 2025.
Convex demand curve. The demand is called convex (with respect to the origin [7]) if the (generally down-sloping) curve bends upwards, concave otherwise. [8] The demand curvature is fundamentally hard to estimate from the empirical data, with some researchers suggesting that demand with high convexity is practically improbable.