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Bundle A consists of 6 units of the consumption good when you’re young and 12 units...

Bundle A consists of 6 units of the consumption good when you’re young and 12 units when you’re old and Bundle B consists of 4 units of the consumption good when you’re young and 10 units when old. True or false: if given a choice, you will always choose Bundle B.

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Answer #1

Statement is false as consumer if given a choice will choose bundle A compared to bundle B as it include more of the consumption goods in both periods i.e. when young and when old. Bundle A include 6 units of consumption goods when young while bundle B only include 4 units of consumption goods when young and bundle A consists of 12 units of consumption goods when old while bundle B consists of only 10 units of consumption goods when old. Since, bundle A have more of goods consumed when young and old than bundle B , consumer will choose bundle A not bundle B.

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