Consider the following table which shows a consumer's amount of expenditure on 3 different bundles, A, B and C and at 3 different price ratios, X, Y and Z. Assume that bundle A is purchased at prices X; bundle B is purchased at prices Y; bundle C is purchased at prices Z. Row 1 Row 2 Row 3 Prices Prices X (1,1) Prices Y (1, 2) Prizes Z (2,1) Column 1 Bundle A 6 9 9 Column 2 Bundle B 4 7 Column 3 Bundle 5 8 7 Given the consumer's choices, we can use the table to determine whether this consumer's preferences are rational by adding an asterisk (*) to those bundles which are less preferred to the purchased bundle. We can then determine if their preferences violate the weak axiom of revealed preference. Into which row/column combination would you need to add an asterisk (*) to indicate he preference relation? O Only Row 3 Column 2 O Only Row 1 column 2; Row 1 column 3; Row 3 column 2 O Only Row 1 column 3 and Row 3 column 2 O Only Row 1 column 2 and Row 1 column 3 O Only Row 1 column 2: Row 1 column 3: Row 4 column 1: Row 3 column 2

Consider the following table which shows a consumer's amount of expenditure on 3 different bundles, A, B and C and at 3 different price ratios, X, Y and Z. Assume that bundle A is purchased at prices X; bundle B is purchased at prices Y; bundle C is purchased at prices Z. Row 1 Row 2 Row 3 Prices Prices X (1,1) Prices Y (1, 2) Prizes Z (2,1) Column 1 Bundle A 6 9 9 Column 2 Bundle B 4 7 Column 3 Bundle 5 8 7 Given the consumer's choices, we can use the table to determine whether this consumer's preferences are rational by adding an asterisk () to those bundles which are less preferred to the purchased bundle. We can then determine if their preferences violate the weak axiom of revealed preference. Into which row/column combination would you need to add an asterisk () to indicate he preference relation? O Only Row 3 Column 2 O Only Row 1 column 2; Row 1 column 3; Row 3 column 2 O Only Row 1 column 3 and Row 3 column 2 O Only Row 1 column 2 and Row 1 column 3 O Only Row 1 column 2: Row 1 column 3: Row 4 column 1: Row 3 column 2

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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