Question
(a) Explain what is meant by the statement that preferences are non-satiated. (b) Zarak's preferences satisfy all 5 assumptions of consumer theory. Is it possible
(a) Explain what is meant by the statement that preferences are non-satiated.
(b) Zarak's preferences satisfy all 5 assumptions of consumer theory. Is it possible for Zarak to have
two different indifference curves giving the same level of utility? Explain using a diagram.
(c) Rafayal, a theatregoer, can choose to see a musical for 80 or a drama for 60 in his local theatre. He buys a ticket for the musical. He later receives an email to fill in a survey asking at what price he would have been indifferent between the musical at 80 and the drama. Rafayal completes the survey indicating 70. Are Rafayal's decisions consistent with consumer theory?If not, briefly explain what could explain Rafayal's behaviour.
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