Kenangan likes to have time at a coffee shop that also sells “roti bakar.” When the price of a cup of coffee was 10,000 rupiah and the price of roti bakar was 20,000 rupiah, Kenangan ordered three cups of coffee and two pieces of roti bakar. When a pandemic happens, there are increases in the price of coffee. Now the price of a cup of coffee is 12,000 rupiah while the price of roti bakar is down to 16.000 rupiah. Kenangan now orders two cups of coffee and one piece of roti bakar. Determine whether Kenangan’s demand for a cup of coffee and roti bakar fulfills the WARP. Explain using graphics
PROBLEM 4 – Weak Axiom of Revealed Preference (WARP)
Kenangan likes to have time at a coffee shop that also sells “roti bakar.” When the
When a pandemic happens, there are increases in the price of coffee. Now the price of a cup of coffee is 12,000 rupiah while the price of roti bakar is down to 16.000 rupiah. Kenangan now orders two cups of coffee and one piece of roti bakar.
Determine whether Kenangan’s
WARP refers to a preference that consumers try on the basis of income and prices. It helps analyze if one good is better than the other. If the consumer buys a good in comparison to another, then the consumer will always prefer the other good.
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