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a) A consumer likes sugar in her coffe, but she simply cannot taste the difference between a cup of coffee with n grams of sugar in it and a cup of coffee with n+1 grams. Suppose a teaspoon of sugar is 6 grams, and suppose she takes her coffee with one teaspoon of sugar. Why does this situation violate transitivity?

b) Let’s call a committee of 3 people a "consumer" (groups of people often act together as "consumer") our committee makes decisions using majority voting. When the committee members compare two alternatives, a and b, say, they simply take a vote, and the winner is said to be "preferred" by the committee to the loser. suppose the Person 1 likes a best, b second best, and c third best, which we can write as: person 1: a,b,c. assumer the preference of the other two people are: person 2: b, c, a and person 3: c,a,b. show that in this example the committee preferences produced by majority voting violates transitivity. Show further that whoever is chair of the committee can always get the way is she knows the others preferences and uses her agenda-setting powers strategically

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M91230601

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