Suppose you have the following information about the choices of an agent (here we assume, as always

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Suppose you have the following information about the choices of an agent (here we assume, as always that the price of good 2 is normalized to 1)

1) The agent chose bundle (2,6), and the price of good 1 is p1 = 2

2) The agent chose bundle (0,8), and the price of good 1 is p1 = 0.5

3) The agent chose bundle (5,1), and the price of good 1 is p1 = 1

Answer the following:

(i) Assuming the agent has monotonic preferences, draw on the same graph the three budgets and choices corresponding to situations 1,2, and 3.

(ii) Based on the info you got and your graph, can this agent's choices be rationalized by some monotonic utility function?

Related Book For answer-question

Principles of economics

ISBN: 978-0538453042

6th Edition

Authors: N. Gregory Mankiw

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Posted Date: Feb 28, 2023 11:26 PM

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Suppose you have the following information about the choices of an agent (here we assume, as always

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Expert Answer:

i The three budgets and choices can be drawn on a graph with good 1 on the xaxis and good 2 on the y... View the full answer

Principles of economics

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