Economics · Revealed Preference Theory
According to Consumer Choice Theory, what does the Weak Axiom of Revealed Preference (WARP) state?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1If bundle A is chosen over bundle B in one situation, bundle B can never be chosen under any price-income scenario.
- 2If bundle A is revealed preferred to bundle B (where A ≠ B), then bundle B cannot be revealed preferred to bundle A.✓
- 3Consumers will always choose the cheapest available bundle of goods.
- 4The marginal utility of all goods in a bundle must be equal.
Correct answer
If bundle A is revealed preferred to bundle B (where A ≠ B), then bundle B cannot be revealed preferred to bundle A.
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