Consider the bundles in the blue region in the graph above, and how those bundle
ID: 1135707 • Letter: C
Question
Consider the bundles in the blue region in the graph above, and how those bundles bundles x y, and z compare to t For each of the following statements,determine whether it is TRUE for ALL of the bundles in the blue region, or true for only SOME of the bundles in the blue region, or FALSE region, or if there is not enough information to say for all of the bundles in the bl The bundles in the blue region are 1. strictly preferred to True tr some, but not all Fahe er al Not enough information exactly as good as x.| 3 esxactly as good asy. Select) 4. strictly preferred to z. 5. not weakly preferred to z Select 2. Select) FSExplanation / Answer
1. strictly preferred to x - true for all
(All the bundles lie above the indifference curve on which x lies so they all are strictly preferred to x as higher indifference curve means more satisfaction)
2. exactly as good as x - false for all
(No part of blue region coincides with the indifference curve on which x lies so none of the bundle in that region is exactly as good as x)
3. exactly as good as y - true for some, but not all
(The blue region covers the indifference curve on which y lies. All the bundles on an indifference curve gives same satisfaction. So, some bundles lie on the indifference curve on which y lies and thereby some of them asre exactly as good as y.)
4. strictly preferred to z - false for all
(Entire blue region lie below the indifference curve on which z lies. So, z is stricly preferred to all the bundles in the blue region)
5. not weakly preferred to z - true for all
(weakly preferred means the bundles in the blue region are indifferent to z or preffered over z. None of this is possible as they all lie below z. So, they are not weakly preferred to z)