The Influence of Lexicographic Preference Ordering on Relative Demands under Alternative Price Ratios--A Graphical Presentation.

by K. F. Ryder


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Examination of the effect of relative price changes on the demands for goods or factors of production that are lexicographically ordered in a utility or preference function. Because of this unique ordering, no substitution effects are possible. Moreover, the income effects are constrained and influence the demand for only one good or factor. It appears possible to observe a relative decrease in the demand for the "favored" good or factor, even though both goods are normal or both factors have positive marginal products. If this model accurately reflects the preference ordering for local public school administrators, a standard economic analysis of the current crises in the teacher labor market could yield inappropriate conclusions regarding the adjustment process on the demand side. 7 pp.

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