Question 2 Suppose there are only two goods: Beer and Milk. Jose's preference over bundles of beer and milk is as follows: for any two bundles A = (bA, mA) and B = (bB, mB) (where b and m denotes the amount of beer and milk, respectively), A _ B if and only if: Either: bA > bB; Or: bA = bB and mA > mB. In other words, Jose cares first and foremost the amount of beer, but if the two bundles contain the same amount of beer, then he prefers having more milk to less. (a) (5 marks) Is Jose's preference strongly monotone? Explain. (b) (5 marks) Is Jose's preference convex? Explain. (c) (5 marks) Recall that A ~ B iff A _ B and B _ A. Define the relation A ~ B in terms of bA, bB, mA and mB. (HINT: The relation A _ B in terms of bA, bB, mA and my is defined by Either bA > bB; Or bA = bB and mA > mB. ) (d) (5 marks) Recall that A > B iff A _ B and By A. Define the relation A > B in terms of bA, bB, mA and mB. (HINT: The relation A _ B in terms of bA, bB, mA and mg is defined by Either bA > be; Or bA = bB and mA > mB. ) (e) (5 marks) Explain how the shape of the indifference curve for Jose's preference looks like. Draw three examples of indifference curves. Choose one bundle in the graph, label it E, and indicate the set that is strictly preferred to the bundle E. [Hint: Use the results from part (d).]