The following table consists of the data on revealed preferences. Situation A B C a. b....

 

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The following table consists of the data on revealed preferences. Situation A B C a. b. C. d. P₁ 3 1 3 P2 1 2 2 P3 4 2 4 X1 3 3 2 X2 1 4 3 X3 3 2 Use a table to show the expenditure of the bundles under different prices. State the affordable bundles for each price. State all the directly and indirectly revealed preferences. Explain whether there are any WARP and SARP violations. Both revealed preference approach and indifference curve approach assume transitivity. Which approach do you think is better? Discuss. Give an example to argue that preferences violating transitivity are not compatible with rational decision making, since consumers can be exploited by exchange of consumption bundles. The following table consists of the data on revealed preferences. Situation A B C a. b. C. d. P₁ 3 1 3 P2 1 2 2 P3 4 2 4 X1 3 3 2 X2 1 4 3 X3 3 2 Use a table to show the expenditure of the bundles under different prices. State the affordable bundles for each price. State all the directly and indirectly revealed preferences. Explain whether there are any WARP and SARP violations. Both revealed preference approach and indifference curve approach assume transitivity. Which approach do you think is better? Discuss. Give an example to argue that preferences violating transitivity are not compatible with rational decision making, since consumers can be exploited by exchange of consumption bundles.

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a Table Showing Expenditure of Bundles Under Different Prices Price Bundle A Bundle B Bundle C P1 9 3 6 P2 4 4 4 P3 7 8 12 X1 9 3 12 X2 4 4 8 X3 12 8 ... View the full answer