Draw each budget line, a. Draw each budget line. Represent

Draw each budget line

Reference no: EM13870264

We observe the consumption behavior of a given consumer in 5 dier- ence price-income settings. The following table summarize prices and

consumption in each of these settings. There is only two goods.

Setting p1 p2 x1 x2

A 1 1 5 35

B 1 2 35 10

C 1 1 10 15

D 3 1 5 15

E 1 2 10 10

a. Draw each budget line. Represent the chosen bundles, naming them respectively A, B, C, D, E.

b. Is this consumer's behavior compatible with the weak axiom of revealed preferences?

c. Circle in red those points you are sure they bring less utility than bundle C.

d. You are told this consumer's preferences are monotonic and con- vex, and that his behavior follows the strong revealed preferences

axiom. Circle in blue all the points you are sure they bring at least as much utility as bundle C.

Reference no: EM13870264

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