You like bundle A better than bundle B, and bundle C is an average between A and B.If your tastes satisfy convexity, then C is at least as good as A and as B.

Question

Quizplus · Accepted Answer

Convexity implies that a consumer prefers mixtures or averages to extremes, but if a consumer already prefers A to B, then a mixture or average (C) would not necessarily be preferred to A, just potentially preferred over B or seen as an acceptable alternative. Convex preferences suggest a liking for diversification but do not guarantee that a mix is preferred over the most preferred option.

You Like Bundle a Better Than Bundle B, and Bundle