1. Part 1(a) What are the three basic axioms of preferences in the rational choice model that aresufficient to ensure that a utility function exists?(b) What is it called when one of those axioms is violated?(c) What is a reference point?(d) Draw a graph of the indifference curves of someone who could be influenced by either oftwo reference points.(e) Is one of the axioms above violated by those indifference curves? If so, which one?(f) Explain how those indifference curves violate the axiom you identified, by labeling somepoints on the indifference curves and indicating the exact violation.

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(a) What are the three basic axioms of preferences in the rational choice model that are sufficient to ensure that a utility function exists?

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter21: The Theory Of Consumer Choice

Section: Chapter Questions

Problem 11PA

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Question

1. Part 1
(a) What are the three basic axioms of preferences in the rational choice model that are
sufficient to ensure that a utility function exists?
(b) What is it called when one of those axioms is violated?
(c) What is a reference point?
(d) Draw a graph of the indifference curves of someone who could be influenced by either of
two reference points.
(e) Is one of the axioms above violated by those indifference curves? If so, which one?
(f) Explain how those indifference curves violate the axiom you identified, by labeling some
points on the indifference curves and indicating the exact violation.

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