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Economics question 3. Consider the case of a preference relation (assumed to be a complete continuous preorder) that is not locally nonsatiated (abbreviated as l.n.s.

Economics question

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3. Consider the case of a preference relation (assumed to be a complete continuous preorder) that is not locally nonsatiated (abbreviated as l.n.s. or Ins) at any vector in the consumption set, which is assumed to be the set of all nonnegative vectors in the plane. (20 points total) (a) Define or precisely describe such a preference relation. (5 points) (b) Show that it's a complete preorder. (5 points) (c) Explicitly show a utility function that represents this preference relation and then completely characterize the set of all utility functions that represent this preference relation. (5 points) (d) If the prices of the two commodities are p1 and p2 and the consumer's income is I, what is demand? Explain briefly. (5 points)

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