Consider the concept of revealed preference. Suppose a consumer chooses basket A over basket B when basket B costs the same amount. The consumer:
A) must find basket $A$ better than basket $B$.
B) must find basket $B$ better than basket $A$.
C) must find basket $A$ at least as good as basket $B$.
D) must find basket $B$ at least as good as basket $A$.

Question

Quizplus · Accepted Answer

The consumer is choosing basket A over basket B despite them costing the same amount, which means that at the very least, basket A is as good as basket B in terms of the consumer's preferences. It is possible that the consumer finds basket A strictly better than basket B, but we cannot say for sure based on this information alone. Therefore, the correct choice is C, which indicates that the consumer must find basket A at least as good as basket B. Revealed preference states that a consumer's preferences can be inferred by observing their choices in the market. If a consumer chooses basket A over basket B when both cost the same, it can be inferred that the consumer finds basket A at least as good as basket B. This is because if the consumer found basket B to be better than basket A, they would have chosen basket B instead. Therefore, choice C is the correct answer.

Consider the Concept of Revealed Preference AAA Better Than Basket BBB B) Must Find Basket

Consider the Concept of Revealed Preference $A$ Better Than Basket $B$
B) Must Find Basket