Revealed preferences tells us that if basket $A$ costs less than basket $B$ but the consumer chooses $B$ instead of $A$, then we know that:
A) $A$ is strictly preferred to $B$.
B) $A$ is at least as preferred to $B$.
C) $B$ is strictly preferred to $A$.
D) $B$ is as least as preferred to $A$.

Question

Quizplus · Accepted Answer

Revealed preferences state that the choices made by consumers reveal their preferences. If a consumer chooses basket B over A, despite A being cheaper, this indicates that B is preferred over A. Therefore, option C, "B is strictly preferred to A" is the correct answer. Option A, "A is strictly preferred to B" cannot be true because the consumer did not choose A. Option B, "A is at least as preferred to B" cannot be true because the consumer chose B over A. Option D, "B is at least as preferred to A" is also incorrect because it suggests that the consumer has no clear preference between the two baskets, but the fact that they chose B over A suggests otherwise. Revealed preferences tells us that consumers choose the option that they prefer, so if they choose basket $B$ over basket $A$ despite $A$ being cheaper, then we can infer that they strictly prefer $B$ over $A$. Therefore, the correct answer is C: $B$ is strictly preferred to $A$.

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