3. Assume that the set of alternatives is X= R2. Consider the family of budget sets B = {B(1,1),2, B(3,4), B(4,2).:}, and suppose that the choice rule C() is such that C(B(1,1),2)= {(1,1)}. (Remember that the budget set B(1), has associated prices (P1, P2) and in- come w) (a) If the choice rule C(-) is such that the consumer demands more than 1 unit of good 1 under B(3,4)., show that the choice structure (B, C(-)) does not satisfy WARP.

3. Assume that the set of alternatives is X= R2. Consider the family of budget sets B = {B(1,1),2, B(3,4), B(4,2).:}, and suppose that the choice rule C() is such that C(B(1,1),2)= {(1,1)}. (Remember that the budget set B(1), has associated prices (P1, P2) and in- come w) (a) If the choice rule C(-) is such that the consumer demands more than 1 unit of good 1 under B(3,4)., show that the choice structure (B, C(-)) does not satisfy WARP.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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