Question 2.
(a) A consumer has a budget constraint which takes the usual
form m ≥ pxx +
pyy,
(where m is income
and px,
py are the prices of
x and y respectively), and is observed
to choose (x, y) = (3, 5) when
(px, py) = (1,
2) and (x, y) = (5, 3) when
(px, py) = (2, 1). Is the
consumer’s behaviour consistent with the (weak) axiom of revealed
preference?
(b) Suppose an individual has no income, but is endowed with...