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Evaluating Consumer Rationality
An economist observes a consumer's choices between two goods: apples and bananas. The consumer makes the following two statements:
- 'When comparing a bundle with 3 apples and 5 bananas to a bundle with 3 apples and 4 bananas, I will always choose the one with 5 bananas.'
- 'When asked to compare a bundle of 10 apples and 1 banana with a bundle of 1 apple and 10 bananas, I cannot make a decision. They are just too different for me to rank.'
For each statement, identify the corresponding fundamental assumption about consumer preferences and explain whether the consumer's behavior upholds or violates that assumption.
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Economics
Economy
Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
CORE Econ
Social Science
Empirical Science
Science
Analysis in Bloom's Taxonomy
Cognitive Psychology
Psychology
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A consumer is asked to compare three different baskets of goods: Basket X, Basket Y, and Basket Z. The consumer makes the following statements:
- 'I prefer Basket X to Basket Y.'
- 'I prefer Basket Y to Basket Z.'
- 'I prefer Basket Z to Basket X.'
Based on these statements, which fundamental assumption about rational preferences is violated?
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