Question

1. Suppose Madelines preferences on the consumption bundles are represented by the following table. Which of the following trades is Madeline willing to make? Explain why or why not. Table 1: Madelines Alternatives and Preference Ranking #11 | #7 | #3 | #1 2 | #13| #8 | #4 | #2 Cheese pizza 1 F15-01 # 0 | #16 | #14 | #12 | #10 0 Frozen yogurt (a) Starting with one scoop of yogurt and one slice of pizza, swap one scoop of yogurt for two slices of pizza (b) Starting with two scoops of yogurt and no pizza, swap two scoops of yogurt for three slices of pizza (c) Starting with three scoops of yogurt and one slice of pizza, swap two scoops of yogurt or two slices of pizza.
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Answer #1

Answer: The first bundle (1 Y. 1 P) has a rank of #9. The new bundle (OY, 3P) has a rank of #1 1 . Hence this swapping is uti

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