Question

Assess whether the following statements are true or false. Do not forget to motivate your answer. Your argument should in principle prove the claim or prove it wrong.

1. Claim: If we know that Gustens preferences are transitive, then we can auto- matically conclude that they are also complete.

(2) Hilda's consumption set consists of two goods: knäckebröd (K) and caviar (C). Knäckebröd is an inferior good, but it is not a Giffen good. Hilda is currently enjoying both knäckebröd and caviar. Claim: If the price of caviar goes up by a small amount, then Hilda will neces- sarily consume more knäckebröd.

Answer 1

1 True

2. True

Please refer to the handwritten notes.