Topic 2 - T2

Question 1

WARP

Answer 1

A consumer would never choose qb at any other prices where qa is cheaper (if it is directly revealed that qa is preferred).

Question 2

SARP

Answer 2

There should be no cycles, preferences should be transitive

Question 3

Negativity

Answer 3

(pb-pa)’(qb-qa)<= 0

Question 4

Slutsky compensation

Answer 4

Makes the initial bundle still affordable

Question 5

Slutsky equation

Answer 5

∂gi/∂pj = qaj* ∂fi/∂y + ∂fi/∂pj