401-samplequest1q

401-samplequest1q - E 401 1 Sample questions 1 cfw_a b...

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frqrplfv 401 1 Sample questions 1 1. Let X = { a, b, c, d } , B = ± { a, b } , { a, c } , { a, d } , { b, c } , { b, d } , { c, d } , { d, b, c } , { a, b, d } , { a, c, d } ² and ( B ,C ( · )) be a choice structure. Suppose C ( · ) is such that d is the best choice whenever d is available and C ( { a, b } )= { a } ,C ( { b, c } )= { b } , and C ( { c, a } )= { c } . (a) Does C ( · ) satisfy WARP? (b) Is there a rational preference relation which rationalizes C ( · ) on B ? (c) If { a, b, c } were another budget set could C ( · ) satisfy WARP? Defend your answers to (a), (b) and (c) carefully. 2. You are given the following information about a consumer’s purchases. Goods 1and2aretheon lygoodsconsumed . Year 1 Year 2 Quantity Price Quantity Price Good 1 100 100 120 100 Good 2 100 100 ? 80 Forwhatva lueso fgood2consumedinyear2wou ldyouconc lude : (a) that the consumer’s consumption bundle in year 1 is revealed preferred to that
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This note was uploaded on 01/26/2012 for the course ECON 401 taught by Professor Burbidge,john during the Fall '08 term at Waterloo.

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401-samplequest1q - E 401 1 Sample questions 1 cfw_a b...

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