Q12 of 26 Page 34

Suppose a consumer’s preferences are monotonic. What can you say about her preference ranking over the bundles (10, 10), (10, 9) and (9, 9)?

As per monotonic preference, the bundles should be ranked as below –























Rank



Bundle



Reason



1



(10,10)



As it has maximum quantity of both commodity



2



(10, 9)



As it has more quantity of commodity1



3



(9, 9)



As it has minimum quantity of both commodity




More from this chapter

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10

What do you mean by ‘monotonic preferences’?

 11

If a consumer has monotonic preferences, can she be indifferent between the bundles (10, 8) and (8, 6)?

 13

Suppose your friend is indifferent to the bundles (5, 6) and (6, 6). Are the preferences of your friend monotonic?

 14

Suppose there are two consumers in the market for a good and their demand functions are as follows:

d1(p) = 20 – p for any price less than or equal to 20, and d1(p) = 0 at any price greater than 20.


d2(p) = 30 – 2p for any price less than or equal to 15 and d1(p) = 0 at any price greater than 15.


Find out the market demand function.