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Question 2: Short questions about preference relations & axioms [20 points] For each of the following statements, name the axiom(s) of consumer theory that support(s)
Question 2: Short questions about preference relations & axioms [20 points] For each of the following statements, name the axiom(s) of consumer theory that support(s) the statement, and justify the statement using the axiom(s) that you've named. This isn't a math class, so you don't need to turn in a rigorous proof - we're just looking to see that you know the definitions of the axioms and can use them in economic arguments. 1. Indifference curves cannot cross. 5 points] 2. Indifference curves are downward-sloping. [5 points] 3. The consumer's optimal choice lies on the budget constraint (i.e., she spends all of her income). [5 points] 4. The marginal rate of substitution (MRS) is decreasing (in absolute value) in good x. [5 points]
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