Question
1.- The following table represents the ranking (of all bundles you need) that represents the tastes of a consumer over bundles of (indivisible) haircuts (per
1.- The following table represents the ranking (of all bundles you need) that represents the tastes of a consumer over bundles of (indivisible) haircuts (per semester) and spa sessions (per semester). Ranking 1 (1,3) (2,2) 2 (1,2) (0,3) 3 (4,0) (3,1) 4 (2,1) (0,2) 5 (1.1) (3,0) 6 (2.0) (0,1) 7 (0,0) (1,0) a) The consumer has no money, but an allowance of 2 haircuts and 1 spa session per semester. If she also received one voucher that she can redeem for either one haircut or one spa session, which one do you think she would choose? b) Now suppose that the consumer is offered to give up the spa session in exchange for one additional haircut. Would she accept? If not, how many additional haircuts would we need to give her (at least) in exchange for that spa session so that she accepts?
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