Unformatted text preview: The first debit card was used to purchase 235 gallons of gas and 26 CDs. The second debit card was used to purchase 265 gallons of gas and 24 CDs. Using revealed preference theory, identify which card Tammy must possess. Solution: From the diagram, we see that point D is revealed preferred to point B. This implies that Tad would not choose to consume at point B. Thus, we know that Tad must have consumed at point C and has the second debit card. This means Tammy has the first debit card....
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This note was uploaded on 04/07/2009 for the course ECON 302 taught by Professor Toossi during the Spring '08 term at University of Illinois at Urbana–Champaign.
- Spring '08