Question

10. Here is a table of a consumer's choice at different prices. Table 1: Some consumption data. Observation P1 P2 01 02 1 1 1 5 1 2 2 1 3 2 a) Fill out the following table indicating the cost of each bundle at each set of prices. The diagonal entries measure how much the consumer is spending at each choice. Put a star, in the entry in row $, column t, if the number in that entry is less than the number in rows, columns (i.e. the diagonal entry). Be sure to SHOW ALL WORK. Table 2: Cost of Each Bundle at Each Set of Prices Bundles Prices 2 b) Are the consumer's choices consistent with WARP? Explain your reasoning. (Hint: Use Table 2 to find any and all directly revealed preference relations. Do these set of preferences contradict WARP?].
please help with question 10 part a and b! please be descriptive with the answers so i can better understand! thank you :)

Answer 1

Observation & Por su sa 5 1 1 2 2 1 3 2 WARP It (24, dp) is directly revealed preferred to (4 Y and the two bundles are not the same, then it can not happen that (y, 4₂) is directly po revealed preferred to (1, 82). To make the table ? we need the calculations, a Total expenditure of bundle I at price vector 1 is computed by (1x5) + (1x1) = 6 is price vector Total expenditure of bundle 2 at computed by, (1+3) + (1x2) = 5 Going through similar conclusion we can make the table Bundles Prices 21 118 The pattern in which was to put to an entry suggests that, the diagonal elements are the expentity expenditure of a particular bundle at price of that period. The term row's and coloumn of' means nothing but the diagonal elements. since (1) entrey) (1, 2) entry we put ce star at 5.

The consumer's choice is consistent with WARP. Because at observation 1, though bundle two was affordable the consumer de opted for bundle 1. But in situation 2. bundle & was not affordable when he/she opted for bundle 2. Helshe would have been violated WARP if inspite of affordat affordibility of both commodity he/she opted for bundle 2. The set of preference wood doesn't contradict WARP.