Question

Consider the bundle E = (3,5) of two goods. If the consumer preferences are strictly follow...

Consider the bundle E = (3,5) of two goods. If the consumer preferences are strictly follow ‘more is better’, which of the following bundles is definitely preferred to E?
a. C = (5, 3)
b. B = (4, 4)
c. A = (4, 5)
d. None of the above.

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Answer #2

The correct answer is 'Option C'.

The bundle E is given as:

E = (3,5)

It is given that the consumer prefers more of the goods. So, the bundle A = (4,5) will be preferred as more of the first good is consumed and the consumption of the second good does not change and more units of both the goods combined are consumed. However, the other bundles (C and B) will lead to a fall in the consumption of any one good. So, the consumer will prefer the bundle A. Therefore, the correct answer is 'Option C'.

answered by: anonymous
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