Micro doubts

[Homer Simpson]

1) If MRS of individual A is greater than MRS of individual B, it is possible for individual A to gain by giving up

A. Y in exchange for more X
B. X in exchange for more Y

2) Consumer surplus is highest in case of -

A. Necessities
B. Comforts
C. Luxuries
D. Conventional necessities

3. The revealed preference theory assumes

A. Strong ordering
B. Weak ordering
C. Introspection
D. None of these

4. Arc elasticity gives a better measure of point elasticity of a curvilinear demand curve as

A. The size of the arc becomes smaller
B. The curvature of the demand curve over the arc becomes less
C. Both of these
D. None of these

5.

What kind of goods are 1 and 2, as shown by the Income consumption curves?

[The Villain]

2 necessities...In case of necessities the consumer is willing to pay whatever the price is charged. As a result consumer surplus is highest in case of necessities.

[The Villain]

q 4 is c

[Dreyfus]

It should be A for q1...

[bhavya jain]

5) both the goods are inferior.
IC1 represents inferior in good 2
IC2 represents inferior in good 1

[Homer Simpson]

Thank you Ron, Vaibhav and Bhavya! Any idea on 3?

[ViV]

@Tsuki: for Q1 just 2 options are there?
@Vaibhav how did you come up with the sol of Q1. Please explain..

[Homer Simpson]

well yeah, i was given only 2 options for question 1 - i guess its related to that edgeworth box stuff (cuz at pareto optimal, MRS of A and B would be equal)

[ViV]

okay! Thanks then It would be (a) for Q1
Q3

At price P2 we are consuming X2 when X1 is also available at price P2. So, X2 RP X1.
This shows the introspection( self-examination,self-analysis,the examination of one's own thoughts)
This Introspection word is used in Science. But this word's meaning links the meaning of Revealed Preference.
So I would like to bet on option (c)
what's your view???

[Dreyfus]

Hey tsuki.....using edgeworth box concept could be disastrous here....what I did is
Person A: dy/dx=MUx/MUy=2/1 marginal utility from consuming x is greater than that from y
PersonB: day/DX=MUX/MUy=1/1
So, when person A gets 1 unit of X from B in exchange of Y .....person A's utility will definitely increase!

[ViV]

Even I did the same..

[Homer Simpson]

Lol, ok. 1 was more of a long shot for me :D but i see the point now.

As for revealed preference, i dunno, it seems more about "observation" of what the consumer actually consumes and then we sort of expect him to stay consistent on that ground unless he cant afford to do so.

[kangkan]

accd to wikipedia, the assumption x>x or x<x is an example of strict weak ordering...we make this assumption in revealed preference..so i guess i guess its strong ordering..he y tsuki...can you explain 5....i cudnt get why t was inferior by looking at the graph..it seems they are inferior and normal over different ranges

[Shefali]

I think for quest 3 its a..m nt sure though