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Alice's preferences are rational, convex, continuous, and locally non-satiated. Suppose that she is indifferent between the consumption bundles she chooses at ( p , w
Alice's preferences are rational, convex, continuous, and locally non-satiated. Suppose that she is indifferent between the consumption bundles she
chooses at (p, w) and (p, w); that is, x(p, w) x(p, w). Let p = 1/2 (p + p) and w'' =1/2(w+w'), and suppose that p' /= p and w /=w'.
(a) Is it true, false, or uncertain that x(p, w) x(p, w)? Why?
(b) Is it true, false, or uncertain that x(p, w) x(p, w)? Why?
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