Question 2 Suppose there are only two goods: Beer and Milk. José's preference over bundles of beer and milk is as follows: for any two bundles A = (bA, MA) and B = (bв, mB) (where b and m denotes the amount of beer and milk, respectively), A B if and only if: Either: bA> bB; Or: bA=bg and mд ≥ m³. In other words, José cares first and foremost the amount of beer, but if the two bundles contain the same amount of beer, then he prefers having more milk to less. (₂) ) Is José's preference strongly monotone? Explain
Question 2 Suppose there are only two goods: Beer and Milk. José's preference over bundles of beer and milk is as follows: for any two bundles A = (bA, MA) and B = (bв, mB) (where b and m denotes the amount of beer and milk, respectively), A B if and only if: Either: bA> bB; Or: bA=bg and mд ≥ m³. In other words, José cares first and foremost the amount of beer, but if the two bundles contain the same amount of beer, then he prefers having more milk to less. (₂) ) Is José's preference strongly monotone? Explain
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Question 2 Suppose there are only two goods: Beer and Milk. José's preference over
bundles of beer and milk is as follows: for any two bundles A = (ba, mA) and B =
(bB, mB) (where b and m denotes the amount of beer and milk, respectively), AB if
and only if:
Either: ba > bB;
Or: ba
bB and mA mB.
In other words, José cares first and foremost the amount of beer, but if the two bundles
contain the same amount of beer, then he prefers having more milk to less.
(a)
{ Is José's preference strongly monotone? Explain.
(Ъ)
Is José's preference convex? Explain.
Recall that A ~ B iff A B and B A. Define the relation A ~ B
(c)
in terms of ba,bB, mA and mB. (HINT: The relation A B in terms of ba, bB, mA
and mB is defined by Either ba > bB; Or bA
bв and ma 2 тв. )
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