Alex has a lexicographic preference for two goods. Consider a bundle, A = (3, 5). 1....

Alex has a lexicographic preference for two goods. Consider a bundle, A = (3, 5).
1. Illustrate the better set for the bundle A on the graph.
2. Is the better set you found in part (A) convex? Explain.

Solutions

Expert Solution

Suppose there are two bundles A=(x', y') and B(x'', y'')

Consumer will prefer bundle A over B if A bundle is best affordable to him and give higher satisfaction. Digram with explanation given below.

Yes it is covex

Hope answered your question please hit the like button and also provide your feedback thank you.

Rahul Sunny answered 1 month ago

Next > < Previous

Related Solutions

Kevin has well-behaved preferences and currently has a bundle with positive amounts of two goods. Let...

Kevin has well-behaved preferences and currently has a bundle with positive amounts of two goods. Let x1 and x2 denote the quantities of goods 1 and 2, respectively. Thinking in terms of x1 on the horizontal axis, the absolute value of Kevin’s marginal rate of substitution between the two goods at his current consumption bundle is greater than 3. Using this information, can the theory we have developed so far predict Kevin’s reaction to the following propositions? (Please show all...

Consider the function ?(?)=(?^(4/5))*(?−3). This function has two critical numbers ?<? 1) Then ?= ? and...

Consider the function ?(?)=(?^(4/5))*(?−3). This function has two critical numbers ?<? 1) Then ?= ? and ? = ?. 2) For each of the following intervals, tell whether ?(?) is increasing or decreasing. (−∞,?]: ? [?,?]: ? [?,∞): ? 3) The critical number A is ? and the critical number B is ? (a relative maximum / a relative minimum / neither max nor min ) There are two numbers ?<? where either ?″(?)=0 or f″(x) is undefined. 4) Then C...

1.Suppose that a consumer buys only two goods, X and Y. At the current consumption bundle,...

1.Suppose that a consumer buys only two goods, X and Y. At the current consumption bundle, the marginal rate of substitution is 3, the price of Good X is $4, and the price of Good Y is $2. a.How many units of Good Y is the consumer willing to give up to obtain one more unit of Good X? How many units of Good X is the consumer willing to give up to obtain more unit of Good Y? b.How...

STUCK WITH 3,4,5 U(q1,q2) = (q1)1/3+(q2)1/3 I = $108 1. Calculate optimal bundle (Bundle A) if...

STUCK WITH 3,4,5 U(q1,q2) = (q1)1/3+(q2)1/3 I = $108 1. Calculate optimal bundle (Bundle A) if p1=$4 p2=$1. Show on diagram (q1 in horizontal axis) 2. P1*= 9 p2=$1 calculate optimal bundle (Bundle B) 3. Calculate the income required so that we can obtain the same utility as Bundle A with the price in number 2. Calculate the new bundle (Bundle C) 4. What is the total effect, income effect and substitution effect on q1 because of the increase of...

Alex has 3 tests to take this week. The probability that Alex passes the math test...

Alex has 3 tests to take this week. The probability that Alex passes the math test is 0.63 , the probability Alex passes the History test is 0.80, and the probability Alex passes the chemistry test is 0.88 (4 pts) create a complete tree diagram for the three tests- let T be passed tests (4 pts) create a probability distribution for the number of tests passed what is the probability that Alex will fail all three tests what is the...

Consider the following vectors: →a = 5 −1 3 3 →b = 5 0 1 0...

Consider the following vectors: →a = 5 −1 3 3 →b = 5 0 1 0 →c = −10 3 −3 −7 For each of the following vectors, determine whether it is in span{→a, →b, →c}. If so, express it as a linear combination using a, b, and c as the names of the vectors above. →v1 = 5 −3 2 7 < Select an answer > →v2 = 2 7 6 −7 < Select an answer > →v3 =...

Consider two assets, A and B. A earns +4%, –5%, or +3%, in scenarios 1, 2,...

Consider two assets, A and B. A earns +4%, –5%, or +3%, in scenarios 1, 2, and 3. B earns –5%, +3%, or +4%, in scenarios 1, 2, and 3. Compute the expected rates of return and SD for each asset, A and B. Now, consider a portfolio of assets A and B called AB, where the investor holds fraction 62% of his portfolio in A and fraction (1-62%) in B. Compute the standard deviation of AB and report this...

3. Consider a pure exchange economy with two goods, wine (x) and cheese (y) and two...

3. Consider a pure exchange economy with two goods, wine (x) and cheese (y) and two con- sumers, A and B. Let cheese be the numeraire good with price of $1. Consumer A’s utility function is UA(x,y) = xy and B’s utility function is UB(x,y) = min[x,y]. A has an initial allocation of 10 x and no y, and B has an initial allocation of 10 units of y and no x. (a) Put wine x on the horizontal axis...

1. Ned buys goods X and Y. He can just afford the bundle X = 4...

1. Ned buys goods X and Y. He can just afford the bundle X = 4 and Y = 4. He can also afford X = 6 and Y= 3. Each of these bundles exhausts his income. For full credit, show all necessary work to answer the questions below. a. What is the ratio of the price of x to the price of y? b. Write an equation that gives you Ned's budget line. c. If Ned spent all his...

This problem is to be done in R. Consider two populations A = {3, 5, 7,...

This problem is to be done in R. Consider two populations A = {3, 5, 7, 9, 10, 16} and B = {8, 10, 11, 15, 18, 25, 28}. a) Using R, draw random samples (without replacement) of size 3 from each population, and simulate the sampling distribution of the sum of their maximum. Describe the distribution. b) Use your simulation to estimate the probability that the sum of the maximums is less than 20. c) Draw random samples of...

Subjects