If a consumer satisfies a version of the SARP, then the consumer will make the types of choices that would be made by a decision maker with convex preferences and a continuous, nonsatiated utility function.

Question

Quizplus · Accepted Answer

The Strong Axiom of Revealed Preference (SARP) is a test of consistency in choice behavior. If a consumer satisfies the SARP, it implies that the consumer's choices are consistent with an underlying utility function that is convex and continuous. This means that the consumer prefers more of any given good and is never completely satisfied with the amount of any good, which is known as nonsatiation. Therefore, the statement is true.

If a Consumer Satisfies a Version of the SARP, Then