Question

What does the Weak Axiom of Revealed Preference (WARP)

state?

A If a consumer chooses bundle A over bundle B in one situation, they will always choose bundle B in another situation.

B If a consumer chooses bundle A over bundle B when both are affordable, they should not choose B over A in another situation where both are still affordable.

C Consumers always maximize utility by choosing the cheapest bundle.

D If a consumer chooses a bundle that maximizes utility in one period, they are free to choose any bundle in the next period.

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What does the Weak Axiom of Revealed Preference (WARP)

Solution