Question

In each of the following situations, the possible bundles contain apples and oranges and either 0, 1 or 2 of each. An example bundle would be 2 apples and 1 orange = (2, 1). In each part, there is a description of a set of preferences. If an ordering can be made, make the ordering of the 9 possible bundles, and list any bundles that would be on the same indifference “curve”. If the ordering cannot be made, give a specific example of which bundles cannot be ranked and explain which assumption on preferences is being violated.

1. The bundle that has the largest product of quantity of the two good is preferred. Bundles with equal products are indifferent.

2. (0,0) is the worst bundle. In bundles with a non-zero number of apples, calculate oranges/apples. In bundles with a non-zero number of oranges, calculate apples/oranges. Bigger numbers are better bundles and ties are indifferent.

Answer 1

(apples, oranges)

(0,0)

(0,1)

(0,2)

(1,0)

(1,1)

(1,2)

(2,0)

(2,1)

(2,2)

The bundle that has the largest product of quantity of the two good is preferred. Bundles with equal products are indifferent.

So (2,2) will have highest preference.

This will be followed by (1,2) and (2,1). Both of these will have same preference.

Followed by (0,2),(2,0),(1,1). These three will have same preference.

This will be followed by (0,1) , (1,0). Both of these will have same preference.

Worst bundle will be (0,0)