When the prices were ($4, $1), Maria chose the bundle (x, y)= (8, 6).Now at the new prices, (p_x, p_y), she chooses the bundle (x, y)= (7, 9).For Maria's behavior to be consistent with the weak axiom of revealed preference, it must be that A)p_y = 4p_x. B)4p_y

Question

When the prices were ($4, $1), Maria chose the bundle (x, y)= (8, 6).Now at the new prices, (p_x, p_y), she chooses the bundle (x, y)= (7, 9).For Maria's behavior to be consistent with the weak axiom of revealed preference, it must be that A)p_y = 4p_x. B)4p_y < p_x. C)3p_y < p_x. D)p_x < 3p_y. E)None of the above.

Quizplus · Accepted Answer

For Maria's behavior to be consistent with the weak axiom of revealed preference, the new bundle (7, 9) should not be strictly cheaper than the original bundle (8, 6) at the original prices. This implies 4*7 + 1*9 should be greater than or equal to 4*8 + 1*6, leading to the condition 3p_y < p_x.

When the Prices Were ($4, $1), Maria Chose the Bundle