In defining preference relations over consumption bundles, we require the assumptions of completeness and transitivity. Draw a diagram indicating a situation in which the assumption of transitivity of preferences fails. Explain briefly why you consider that this would be problematic for a consumer. Can you think of a circumstance in real life where the transitivity assumption might not hold?

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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In defining preference relations over consumption bundles, we require the
assumptions of completeness and transitivity.
Draw a diagram indicating a situation in which the assumption of transitivity
of preferences fails. Explain briefly why you consider that this would be
problematic for a consumer.
Can you think of a circumstance in real life where the transitivity
assumption might not hold?
Transcribed Image Text:In defining preference relations over consumption bundles, we require the assumptions of completeness and transitivity. Draw a diagram indicating a situation in which the assumption of transitivity of preferences fails. Explain briefly why you consider that this would be problematic for a consumer. Can you think of a circumstance in real life where the transitivity assumption might not hold?
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