explain the following and give example:

• Optimization-First,weassumethatallindividualsmakeconsumptiondecisions withthegoalofmaximizing their total satisfaction from consuming various goods and services. In consumertheory, we will not allow consumers to either spend less than their income (no saving is allowed)ortospendmorethantheir incomes(noborrowingisallowed).
• Information- The basic model of consumer theory seeks to explain how consumers make theirpurchasingdecisionswhentheyarecompletelyinformedaboutallthingsthatmatter.Specifically,theconsumerisexpectedtoknowalltheproducts andservicesavailable,aswellasthecorresponding utilities each product brings. It is also assumed that consumers know the prices ofthe goods andtheir incomeduringthe time periodinquestion.
• Bundling-Consumertheoryrequiresthatconsumerscanrank(ortoorder)variouscombinationsof goods and services according to the level of satisfaction associated with each combination.These combinations of goods are called consumption bundles. Two (2) important assumptionsmust be madeabouthowconsumers rankgoods:
  • Complete- For any given pair or consumption bundles, consumers must be able to rankthe bundles according to the level of satisfaction they would enjoy from consuming thebundles. A consumption bundle would be ranked higher than another bundle if it offersmore utility. If two (2) bundles give a consumer the exact same amount of utility, theywould have the same ranking, and the consumer is said to be indifferent to them. Whenaconsumer canrankallconceivablebundles ofcommodities,theconsumer'spreferencesare saidtobecomplete.
  • Transitive- This assumption means that the consumer's choices are consistent in the following way: If Bundle Ais preferred to Bundle B, and Bundle Bis preferable to BundleC, then it follows that Bundle Ais preferred over Bundle C. Consumer preferences mustbetransitive,otherwiseinconsistentpreferenceswouldunderminetheabilityofconsumer theorytoexplainorpredictthebundlesconsumerswillchoose.Italsoprevents consumersfrom beingcaught inaperpetualcyclewhere they nevermakeachoice.
• Non-satiation- This concept assumes that consumers would always prefer to have more of thegood, rather than less. It also implies that if Bundle Ahas more goods than Bundle B, Bundle Awouldbepreferred.

IndifferenceCurve-Thisisasetofpointsrepresentingdifferentcombinationsofgoodsandservices,eachofwhichprovidinganindividual withthesamelevel of utility.

CharacteristicsofanIndifferenceCurve:

• Indifference curves are downward sloping- The consumer obtains utility from both goods.When more of one good (Good X) is added, some of the other good (Good Y) is taken away tomaintainthesamelevelofutility.
• Indifference curves are convex- A convex shape means that as consumption of Good X isincreased relative to consumption of Y, the consumer is willing to accept a small reduction in Yforanequal increase inXinordertostayatthesamelevelof utility.
• Indifference curvesare also bowed towards the origin, because consumers prefer a bit ofeverythingrather thanalotofjustonething.