3. Consider an economy with three goods. Consider a consumer with preferences that satisfy completeness, reflexivity,...

 

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3. Consider an economy with three goods. Consider a consumer with preferences that satisfy completeness, reflexivity, transitivity, continuity, and non-satiation. The consumer has the following demand functions for two of the three goods: x₁ = 100-5¹+ Bi Pa P3 P2 x₂ = a + B² +8 P3 P3 P3 Are the consumer's preferences necessarily strongly monotonic? How do you know? (5 points) (b) (c) How would you go about find the demand for the third good? (5 points) Are the demand functions the two goods appropriately homogeneous? Demonstrate. (10 points) 3. Consider an economy with three goods. Consider a consumer with preferences that satisfy completeness, reflexivity, transitivity, continuity, and non-satiation. The consumer has the following demand functions for two of the three goods: x₁ = 100-5¹+ Bi Pa P3 P2 x₂ = a + B² +8 P3 P3 P3 Are the consumer's preferences necessarily strongly monotonic? How do you know? (5 points) (b) (c) How would you go about find the demand for the third good? (5 points) Are the demand functions the two goods appropriately homogeneous? Demonstrate. (10 points)

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Hnswer a Yes The consumers preferences are necessarily st... View the full answer