True or False 1. A consumer with convex preferences who is indifferent between t
ID: 1139574 • Letter: T
Question
True or False
1. A consumer with convex preferences who is indifferent between the bundles (5, 2) and (11, 6) will like the bundle (8, 4) at least as well as either of the first two bundles.
2. If Melody has more classical records than rock and roll records, she is willing to exchange exactly 1 classical record for 2 rock and roll records, but if she has more rock and roll records than classical records, then she is willing to exchange exactly 1 rock and roll record for 2 classical records. Melody has convex preferences.
3.A consumer who is unable to detect small differences in the amount of water in her beer could have a transitive strict preference relation but is unlikely to have a transitive indifference relation.
I know the answer but I don't know why. Please explain.
Explanation / Answer
Answer:
1. A consumer with convex preferences who is indifferent between the bundles (5, 2) and (11, 6) will like the bundle (8, 4) at least as well as either of the first two bundles
Answer: False
Because he will be indifferent between the bundles as consumer has convex preferences so all the bundles will give him same level of satisfaction so he is not going to like the bundle (8,4) but he will be indifferent between all the bundles.
2. If Melody has more classical records than rock and roll records, she is willing to exchange exactly 1 classical record for 2 rock and roll records, but if she has more rock and roll records than classical records, then she is willing to exchange exactly 1 rock and roll record for 2 classical records. Melody has convex preferences.
Answer: False:
Because her preferences are changing as she is not indifferent between the (1,2) and (2,1) bundle she will like either of the bundle depends on the availability of classical and rock and roll records.
3. A consumer who is unable to detect small differences in the amount of water in her beer could have a transitive strict preference relation but is unlikely to have a transitive indifference relation
Answer: true
Because he is indifferent about the amount of water in his beer though he is transitive that he will prefer beer over other thing but is indifferent about the bundle of beer and water as any amount of water with beer will give him same level of satisfaction which shows that he have transitive indifference relation.
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