Consider four consumption bundles, denoted by A, B, C, and D. Which of the following sets of preference statements violates the transitivity assumption?
A)D is preferred to C, C is preferred to B, B is preferred to A, C is preferred to A.
B)A is preferred to B, B is preferred to C, C is preferred to D, A is preferred to C.
C)D is preferred to B, C is preferred to A, A is preferred to B, B is preferred to C.
D)A is preferred to C, B is preferred to A.

Question

Quizplus · Accepted Answer

The preference statements in bundle C violate transitivity. Specifically, D is preferred to B, B is preferred to C, and C is preferred to D, which creates a cycle of preferences and violates the transitivity assumption. The other choices do not violate transitivity.

Consider Four Consumption Bundles, Denoted by A, B, C, and D