A consumer bought the following baskets of goods X, X and X when the prices were those

A consumer bought the following baskets of goods X₁, X₂ and X₃ when the prices were those shown in the table below. Note that prices include a variable α and β that must be determined.

Basket	P1	P2	P3	X1	X2	X3
A	1	1+α	8	2	1	3
B	4	1	4+β	3	4	2
C	3	1	2	2	6	2

Find the range of values α and β such that

a) The Weak Axiom of Revealed Preference holds for all the α and β feasible scenarios

b) The Weak Axiom of Revealed Preference holds and the Strong Axiom of Revealed Preference doesn´t for all the α and β feasible scenarios

Remember that prices cannot be negative.

Answer rating: 100% (QA)

Set A P 1 X 1 12 2 P 2 X 2 1a 1 1a P 3 x 3 83 24 So total expenditure27a Set B P 1 X 1 43 ... View the full answer