if the only information we had about Goldie were that she chooses the bundle (6, 6)when prices are (6, 2)and she chooses the bundle (10, 0)when prices are (3, 5), then we could conclude that
A)neither bundle is revealed preferred to the other.
B)Goldie violates WARP.
C)the bundle (6, 6)is revealed preferred to (10, 0)but there is no evidence that she violates WARP.
D)the bundle (10, 0)is revealed preferred to (6, 6)and she violates WARP.
E)the bundle (10, 0)is revealed preferred to (6, 6)but there is no evidence that she violates WARP.

Question

Quizplus · Accepted Answer

CWhen Goldie chooses the bundle (6, 6) at prices (6, 2), the total cost is 6*6 + 6*2 = 36 + 12 = 48. When prices change to (3, 5), and she chooses (10, 0), the total cost is 10*3 + 0*5 = 30. At the first set of prices, she could afford the second bundle (10, 0) because it would cost 10*6 + 0*2 = 60, which is more than she spent. However, she chose (6, 6) instead, indicating a preference for it given her budget. When the prices change, she chooses (10, 0), which does not directly contradict her previous choice because the price and affordability context has changed. Therefore, neither bundle is revealed preferred to the other based on the given choices and prices, and there's no evidence of violating the Weak Axiom of Revealed Preference (WARP) since we cannot directly compare the choices under a consistent price and affordability scenario.

If the Only Information We Had About Goldie Were That