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EXERCISE 4 You are given the following partial information about a consumer's purchases. He consumes only two goods. Year 1 Year 2 Quantity Price Quantity

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EXERCISE 4 You are given the following partial information about a consumer's purchases. He consumes only two goods. Year 1 Year 2 Quantity Price Quantity Price Good 1 100 100 120 100 Good 2 100 100 ? 80 Note that you do not know how his income has changed from year 1 to year 2. Over what range of quantities of good 2 consumed in year 2 would you conclude: (1) That his behavior is inconsistent (i.e., in contradiction with the WARP)? (2) That good 1 is an inferior good (at some price) for this consumer? (Assume that the WARP is satised)

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