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In a two-good world, suppose that a consumer's observed purchases in two periods are as follows: good 1 good 2 Period Quantitv 100 100 Price
In a two-good world, suppose that a consumer's observed purchases in two periods are as follows: good 1 good 2 Period Quantitv 100 100 Price 100 100 Period Il Quantity 120 ? Price 100 80 Over what range of quantities of good 2 consumed in period II would you conclude: (a) That the consumer's behavior contradicts WARP (the weak axiom of revealed preferences). For the next sub-questions, assume that WARP is satisfied (b) That the bundle in period I is revealed preferred to that of period Il (c) That the bundle in period II is revealed preferred to that of period I. (d) That good 1 is an inferior good (at some price). (e) That good 2 is an inferior good (at some price). 8
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