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Unformatted text preview: Problem Set 2 Solution Key 1- For each of the statements below, discuss whether or not the statement is inconsistent with the assumptions of completeness, transitivity, &more is better. Explain your answer. a- I cannot decide whether I would rather buy a house or take a vaca- tion. This statement is inconsistent with the completeness assumption. Because the consumer is not able to rank these two goods. b- After I have played two games of Go, I didn&t want to play anymore. This statement is inconsistent with "more is better". c- If you give me a ticket to football game, I will give you my new nail polish. This statement is not inconsistent with any of the assumptions. d- The more Whoopi Goldberg movies I see, the more I like them. This statement is not inconsistent with any of the assumptions. 2- For each of the statements below, please indicate whether the statement is True (T) or False (F). Explain your answer. a- ___ Along a linear demand curve, as price falls the elasticity of demand stays the same. False. Along a linear demand curve, as price falls the slope stays the same. The demand for the good, however, becomes more inelastic. b- ___ Jill prefers watching the TV series Lost to watching Greys Anatomy and Jill prefers watching Greys Anatomy to watching Desperate Housewives....
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This document was uploaded on 10/28/2011 for the course ECON 410 at UNC.
- Fall '07