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Author Question: Why do preference reversals occur? What will be an ideal ... (Read 70 times)

danielfitts88

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on: Jun 29, 2018
Why do preference reversals occur?
 
  What will be an ideal response?

Question 2

In the table above, Y is measured along the y-axis and X along the x-axis. The slope between points c and d is
 
  A) 100.
  B) 0.
  C) 0.25.
  D) -4.


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aprice35067

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Reply #1 on: Jun 29, 2018
Answer to Question 1

Preference reversals occur because of present bias. Present bias implies that an individual places much higher weight on present consumption than future consumption. So, if a consumer is not able to consume a good today, he may not want to consume it tomorrow as the utility received from consumption is much smaller than what he would have received if he consumed the good today.

Answer to Question 2

B


danielfitts88

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Reply 2 on: Jun 29, 2018
YES! Correct, THANKS for helping me on my review

mochi09

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Reply 3 on: Yesterday
Excellent

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