Pearson eText Microeconomics -- Access Card
2nd Edition
ISBN: 9780136849513
Author: Acemoglu, Daron, Laibson, David, List, John
Publisher: PEARSON
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Question
Chapter 15, Problem 6Q
To determine
The meaning of preference reversal.
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Any transitive preference is complete.
Chapter 15 Solutions
Pearson eText Microeconomics -- Access Card
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- Disadvantages of scale of preferencearrow_forwardWhat is the importance of scale of preferencearrow_forwardSuppose that a friend of yours recently opened her own business. She is happy because it generated $25,000 in earnings last year. How can you tell whether this is a good investment?arrow_forward
- Consider a consumer who can borrow or lend freely at an interest rate of 100% per period of time (think of the period as being, say, 30 years, a bit like with a mortgage). So r = 1.0, or 100%. The consumer's two-period utility function is: U = In(ct) + (1/2)In(Ct+1) The consumer earn Y=100 each period, so Y₁=100 and Yt+1 also equals 100. If this consumer is behaving optimally, trying to maximize her lifetime utility subject to the IBC, what's her consumption in period t?arrow_forwardWhat is a lifetime utility function, and in what sense does it exhibit diminish-ing returns?arrow_forwardSuppose you have the option of spending $[x] now or saving it until next year. If you save it, the bank will pay you an interest rate of 9.8%. Your utility function is u(w) = w. What does your discount factor & need to be for you to be indifferent between spending the money now and saving it? Round your answer to 3 decimal places (so an answer might be, for example, 0.476).arrow_forward
- Prove that if the Walrasian demand function is generated by a rational preference relation, then it must satisfy the weak axiom. Is the converse true? If yes, prove it, or else give a counterexample?arrow_forwardExplain why the third answer is correct. Explain correctly and fully. I will rate accordingly.arrow_forward
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