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Question
Suppose a consumer’s preferences are monotonic. What can you say about his/her preference ranking over the bundles (10, 10), (10, 9) and (9, 9)?
Solution
| Bundles | U1 |
|
I) (10, 10) |
3 |
|
II) (10, 9) |
2 |
| III) (9, 9) | 1 |
As the consumer’s preferences are monotonic, more is better and he/she will prefer bundle I over the rest of the bundles. This means that bundle I will be assigned a higher utility number i.e., three (rank = three) out of the available three bundles.
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