If Goldie chooses the bundle (6, 6)when prices are ($6, $2)and the bundle (10, 0)when prices are ($2, $5),
A)the bundle (6, 6)is revealed preferred to (10, 0)but there is no evidence that she violates WARP.
B)neither bundle is revealed preferred to the other.
C)Goldie 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)and there is no evidence that she violates WARP.

Question

Quizplus · Accepted Answer

When Goldie chooses (6, 6) at prices ($6, $2), the total cost is $48. When she chooses (10, 0) at prices ($2, $5), the total cost is $20. Since each bundle is chosen under different price conditions and neither bundle could be afforded under the conditions where the other was chosen, there is no basis for revealed preference between the two. Therefore, neither bundle is revealed preferred to the other, and there's no violation of the Weak Axiom of Revealed Preference (WARP).

If Goldie Chooses the Bundle (6, 6)when Prices Are ($6