Consider three bundles: Bundle A: 1 shirt and 2 hats
Bundle B: 2 shirts and 2 hats
Bundle C: 3 shirts and 1 hat
Which of the following violates the assumption of nonsatiated preferences?
A) Nancy prefers Bundle B to C.
B) Diane prefers Bundle B to A.
C) Steve prefers Bundle C to B.
D) Ryan prefers Bundle A to B.

Question

Quizplus · Accepted Answer

The assumption of nonsatiated preferences means that more of a good is always preferred to less. In Bundle A, you have one shirt and two hats, and in Bundle B, you have two shirts and two hats. Since Ryan prefers Bundle A to Bundle B, it violates the assumption of nonsatiated preferences. Option A, B, and C do not violate the assumption of nonsatiated preferences.

Consider Three Bundles: Bundle A: 1 Shirt and 2 Hats