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ECON7110 Tutorial3

The document is a tutorial for ECON 7110 at The University of Queensland, focusing on consumer preferences through pairwise voting and point-based ranking methods. It presents a scenario involving three friends with different food preferences and explores how to determine their group preference using both methods. Additionally, it examines Tom's preferences between two goods, beer and milk, discussing completeness, monotonicity, and weak convexity of his preferences.

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7 views2 pages

ECON7110 Tutorial3

The document is a tutorial for ECON 7110 at The University of Queensland, focusing on consumer preferences through pairwise voting and point-based ranking methods. It presents a scenario involving three friends with different food preferences and explores how to determine their group preference using both methods. Additionally, it examines Tom's preferences between two goods, beer and milk, discussing completeness, monotonicity, and weak convexity of his preferences.

Uploaded by

alazyfemale
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Tutorial 3: Consumers’ Preferences

ECON 7110: Consumer and Firm Behaviour


The University of Queensland

Semester 2, 2025

Question 1
Three friends, Alice, Bob and Carol, have the following individual preferences over the food they
usually get: Chinese, Indian and Italian.

Alice Bob Carol

Most preferred Chinese Italian Indian


Indian Chinese Italian
Least preferred Italian Indian Chinese

Part (a): Pairwise Voting


The friends decide to use pairwise voting to determine their group preference. This means they
compare each pair of cuisines separately. For each pair, they each vote for their preferred option
from that pair, and whichever option gets more votes (at least 2 out of 3) wins that comparison.

• In a vote between only Chinese and Indian food, which cuisine would the group prefer?

• In a vote between only Indian and Italian food, which cuisine would the group prefer?

• In a vote between only Chinese and Italian food, which cuisine would the group prefer?

• Looking at all three comparisons together, is the group’s overall preference transitive?
Explain why or why not.

Part (b): Point-Based Ranking


Now consider using a different method based on points. In this method, each person gives points
based on their ranking: 2 points to their most preferred cuisine, 1 point to their second choice,
and 0 points to their least preferred cuisine.
Note: This point-based method is also known as the Borda count and is used in real elections,
including national local elections in some countries, and competitions like the Eurovision.

• Calculate the total point score for each cuisine by adding up all the points each cuisine
receives from the three friends.

• Based on these scores, what is the group’s preference ranking?


• Is this group preference transitive? How does this result compare to the pairwise voting
method from Part (a)?

Question 2
Suppose there are only two goods: Beer and Milk. Tom’s preference over bundles of beer and
milk is as follows: For any two bundles A = (bA , mA ) and B = (bB , mB ) (where b and m denotes
the amount of beer and milk, respectively), A ≿ B (i.e., “A is at least as good as B”) if and
only if:

Either bA > bB ;

Or bA = bB and mA ≥ mB .

In other words, Tom cares, first and foremost, about the amount of beer, but if the two bundles
contain the same amount of beer, then he prefers having more milk to less.

• Is Tom’s preference complete? If yes, argue why; if no, give an example of two bundles
which Tom cannot compare.

• Is Tom’s preference monotone? Strongly monotone?

• We say preferences exhibit "weak convexity" if whenever two bundles A and C are both
weakly preferred to a bundle B, any mixture of A and C (meaning a weighted average of A
and C) is also weakly preferred to B. Do Tom’s preferences satisfy this property? Explain
why or why not, using a specific (numerical) example with three bundles to illustrate your
reasoning.

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