Max prefers Who-Hash to eggs, sausage and Spam eggs, sausage and Spam to green eggs and ham
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Question:
Max prefers
Who-Hash to eggs, sausage and Spam
eggs, sausage and Spam to green eggs and ham
green eggs and ham to linguine and clams
linguine and clams to Who-Hash.
(a) What basic assumption about consumer preferences does this violate?
(b) Cindy-Lou tries to convince Max that he is irrational, but he insists that in each two-meal comparison above, the value of his more-preferred meal is at least $1 more than the value of his less-preferred meal. Advise Cindy-Lou on how she might make money by taking advantage of Max’s preferences.
Expert Answer:
a This violates the basic assumption of transitivity in consumer preferences Transitivity assumes th... View the full answer
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