In each of the following situations, the possible bundles contain apples and oranges and either 0, 1 or 2 of each. An example bundle would be 2 apples and 1 orange = (2, 1). In each part, there is a description of a set of preferences.
In each of the following situations, the possible bundles contain
apples and oranges and either 0, 1 or 2 of each. An example bundle would be 2 apples and 1 orange = (2, 1). In each part, there is a description of a set of preferences. If an ordering can be made, make the ordering of the 9 possible bundles, and list any bundles that would be on the same indifference “curve”. If the ordering cannot be made, give a specific example of which bundles cannot be ranked and explain which assumption on preferences is being violated (3 points)
-A. Non-satiated in both goods.Any number of apples is always better than any number of oranges.
-B. (1,1) is the best bundle.In bundles with a even numbers of oranges, the best bundle is the one where apples + oranges has the biggest number.In bundles with a even number of apples, the best bundle is the one where (apples)*(oranges) is the largest.
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-C. Non-satiation applies to all relevant bundles (So (1, 2) pref (1,0) etc.).For the others… (1, 0) and (0,1) indifferent(1, 1) pref (0,2)(2, 0) pref (1,1)
(2, 0) and (0,2) indifferent(2, 0) pref (0,1) (1, 2) pref (2,0)
(0, 2) pref (1,0)(2, 1) pref (0,2)(1, 2) pref (2,1)
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