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Unformatted text preview: b is preferred to a • The consumer is indifferent between a and b Assumption 2--Transitivity For any three bundles a, b, and c the following is true If a is preferred to b and b is preferred to c, then a is preferred to c. Assumption 3--More is better: For any two bundles, a and b, if bundle a has at least as much of all goods as bundle b and bundle a has more of some good than bundle b, then bundle a is preferred to bundle b. 3. (6 points) Sketch the graph of two indifference curves for the following situations. Indicate which indifference curve makes the consumer better off. a) Good X and good Y are perfect complements. b) The consumer only cares about how much good X she consumes. It does not matter to her how much of good Y she consumes. Good Y Good X Good Y Good X...
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- Fall '08