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Suppose that you have recorded the consumption data of a consumer over several periods as follows: In period 1, (p1,p2) = (2,2) and he choses
Suppose that you have recorded the consumption data of a consumer over several periods as follows:
In period 1,
(p1,p2) = (2,2) and he choses (x1,x2) = (1,3)
What is the income he must be earning?
In period 2 and 3, you recorded the consumption data of the same consumer again:
Period 2 (p1,p2) = (4,1) and he chooses: (x1,x2) = (2,4)
Period 3 (p1,p2) = (1.5, 3.5) and he chooses (x1,x2) = (3,3)
Show that whether the consumer satisfies the Weak Axiom of Revealed Preferences (WARP) and Strong Axiom of Revealed Preferences (SARP) or not.
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