2. A consumer's preferences rank three good baskets (A, B and C) as follows: - A is at least as good as B. - B is at least as good as C. From these rankings, an economist concludes that basket A is at least as good as basket C. What does the economist assume about preferences? a) They are complete. c) They display local non-satiation (more-is-better). b) They are transitive. d) Marginal utility is decreasing.
2. A consumer's preferences rank three good baskets (A, B and C) as follows: - A is at least as good as B. - B is at least as good as C. From these rankings, an economist concludes that basket A is at least as good as basket C. What does the economist assume about preferences? a) They are complete. c) They display local non-satiation (more-is-better). b) They are transitive. d) Marginal utility is decreasing.
Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN:9781305971493
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter21: The Theory Of Consumer Choice
Section: Chapter Questions
Problem 5CQQ
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please answer the both questions
Transcribed Image Text:2. A consumer's preferences rank three good baskets (A, B and C) as follows:
- A is at least as good as B.
- B is at least as good as C.
From these rankings, an economist concludes that basket A is at least as good as basket C.
What does the economist assume about preferences?
a) They are complete.
c) They display local non-satiation (more-is-better).
b) They are transitive.
d) Marginal utility is decreasing.
3. A consumer is observed to display the following:
MUX
MUy
P
Py
MU: and MUy are the marginal utilities from goods X and Y, respectively. Px and Py are the
prices of goods x and y. To increase utility, what should the consumer do?
a) Decrease the price of good x
c) Increase consumption of good y
b) Increase the price of good y
d) Decrease consumption of good y
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