Let the observed consumption bundles of a con-

sumer in period 0 and period 1 be x⁰ and x¹, given

the price vectors p⁰ and p¹ respectively.

(a) State the weak axiom of revealed preference (WARP). (2)

(b) Suppose that the following price and consumption bundle combinations are observed

p⁰ = (1, 1, 2), x⁰ = (5, 19, 9)

p¹ = (1, 1, 1), x¹ = (12, 12, 12)

p² = (1, 2, 1), x² = (27, 11, 1)

i. Do the observed choices violate WARP? (2).

ii. Do these choices violate the strong axiom of revealed preference (SARP)? (2)