Question: Hello. I need help with this exercise and completed, step by step so I can understand the homework. Please. Consider three consumption bundles x, x',
Hello. I need help with this exercise and completed, step by step so I can understand the homework. Please.
Consider three consumption bundles x, x', and x?, which a consumer purchases at price vectors p', p', and prespectively. Each bundle represents consumption levels of three separate goods. Letx =(xl, x,x),p' = (Pl. p. p.), j = 0,1,2. p = (1,1,1) p' = (1,1,2) p = (1,2,1) x = (12,12,12) x'=(5,19,9) x2 = (27,11,1) a. b. c. d. Use the algebraic statement of the weak axiom of revealed preference to determine: i) Is bundle 0 revealed preferred to bundle 1? Is 1 revealed preferred to 0? ii) Is bundle 1 revealed preferred to bundle 2? Is 2 revealed preferred to 1? iii) Is bundle 2 revealed preferred to bundle 0? Is 0 revealed preferred to 2? Do these choices satisfy the weak axiom of revealed preference (WARP)? Do these choices satisfy the strong axiom of revealed preference (SARP)? Are these choices consistent with the hypothesis that the consumer maximizes utility subject to a budget constraint? Explain. Consider three consumption bundles x, x', and x?, which a consumer purchases at price vectors p', p', and prespectively. Each bundle represents consumption levels of three separate goods. Letx =(xl, x,x),p' = (Pl. p. p.), j = 0,1,2. p = (1,1,1) p' = (1,1,2) p = (1,2,1) x = (12,12,12) x'=(5,19,9) x2 = (27,11,1) a. b. c. d. Use the algebraic statement of the weak axiom of revealed preference to determine: i) Is bundle 0 revealed preferred to bundle 1? Is 1 revealed preferred to 0? ii) Is bundle 1 revealed preferred to bundle 2? Is 2 revealed preferred to 1? iii) Is bundle 2 revealed preferred to bundle 0? Is 0 revealed preferred to 2? Do these choices satisfy the weak axiom of revealed preference (WARP)? Do these choices satisfy the strong axiom of revealed preference (SARP)? Are these choices consistent with the hypothesis that the consumer maximizes utility subject to a budget constraint? Explain
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