A consumer is observed making two choices. First, he faces prices p = (1,3) with wealthw = 8 but is limited to purchasing no more than 3 units of good 1. Given this budget set, hechooses the bundle x = (2, 2). Second, he faces prices p' = (2,1) and wealth w' = 8 with nolimit on his purchases of either good. Given this budget set, he chooses the bundle 2' = (4,0).dentify all revealed preferences given these choices.Do this consumer's choices satisfy the Weak Axiom of Revealed Preference?- Could these choices result from the consumer choosing optimally given some mono-tone, convex, and continuous preferences? Explain your answer carefully; you do nothave to provide a formal proof.

Answered: A consumer is observed making two…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Question

A consumer is observed making two choices. First, he faces prices p = (1,3) with wealth
w = 8 but is limited to purchasing no more than 3 units of good 1. Given this budget set, he
chooses the bundle x = (2, 2). Second, he faces prices p' = (2,1) and wealth w' = 8 with no
limit on his purchases of either good. Given this budget set, he chooses the bundle 2' = (4,0).
dentify all revealed preferences given these choices.
Do this consumer's choices satisfy the Weak Axiom of Revealed Preference?
- Could these choices result from the consumer choosing optimally given some mono-
tone, convex, and continuous preferences? Explain your answer carefully; you do not
have to provide a formal proof.

Expert Solution

Step 1

Since the question you have posted consisted of multiple parts, we will answer the first two questions for you. If you want any particular question to be answered, please specify the question number or post only that question.

Given,

$1 C o n c u m e r T w o C h o i c e s : F i r s t l y : p = (1, 3), w e a l t h w = 8, B u n d l e c h o s e n : x = (2, 2) S e c o n d l y : p' = (2, 1), w e a l t h w' = 8, B u n d l e c h o s e n x' = (4, 0)$

Step by step

Solved in 4 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions