1. Mr. Iyer likes strong coffee, the stronger the better. But he can't distinguish small differences.
Over the
years, Mrs. Iyer has discovered that if she changes the amount of coffee by more than one teaspoon in her six-
cup pot, Mr. Iyer can tell that she did it. But he cannot distinguish differences smaller than one teaspoon per
pot. Where A and B are two different cups of coffee, let us write A > B if Mr. Iyer prefers cup A to cup B. Let
us write A ≥ B if Mr. Iyer either prefers A to B, or can't tell the difference between them. Let us write A ~ B
if Mr. Iyer can't tell the difference between cups A and B. Suppose that Mr. Iyer is offered cups A, B, and C
all brewed in the Mr. Iyer’s six-cup pot. Cup A was brewed using 14 teaspoons of coffee in the pot. Cup B
was brewed using 14.75 teaspoons of coffee in the pot and cup C was brewed using 15.5 teaspoons of coffee
in the pot. For each of the following expressions determine whether it is true of false.
(a) A ~ B
(b) B ~ A
(c) B ~ C
(d) A ~ C
(e) C ~ A
(f) A ≥ B
(g) B ≥ A
(h) B ≥ C
(i) A ≥ C
(j) C ≥ A
(k) A > B
(l) B > A
(m) B > C
(n) A > C
(o) C > A
(p) Is Mr. Iyer’s “at-least-as-good-as" relation, ≥, transitive?
(q) Is Mr. Iyer’s “can't-tell-the-difference" relation ~ , transitive?
(r) Is Iyer’s “better-than" relation, >, transitive.
2. The Bear family is trying to decide what to have for dinner. Baby Bear says that his ranking of the
possibilities is (honey, grubs, Goldilocks). Mama Bear ranks the choices (grubs, Goldilocks, honey), while
Papa Bear's ranking is (Goldilocks, honey, grubs). They decide to take each pair of alternatives and let a
majority vote determine the family rankings.
(a) Papa suggests that they first consider honey vs. grubs, and then the winner of that contest vs. Goldilocks.
Which alternative will be chosen?
(b) Mama suggests instead that they consider honey vs. Goldilocks and then the winner vs. grubs. Which gets
chosen?
(c) What order should Baby Bear suggest if he wants to get his favorite food for dinner?
(d) Are the Bear family's “collective preferences,” as determined by voting, transitive?
3. Coach Steroid likes his players to be big, fast, and obedient. If player A is better than player B in two of
these three characteristics, then Coach Steroid prefers A to B, but if B is better than A in two of these three
characteristics, then Steroid prefers B to A. Otherwise, Steroid is indifferent between them. Wilbur
Westinghouse weighs 340 pounds, runs very slowly, and is fairly obedient. Harold Hotpoint weighs 240
pounds, runs very fast, and is very disobedient. Jerry Jacuzzi weighs 150 pounds, runs at average speed, and
is extremely obedient.
(a) Does Steroid prefer Westinghouse to Hotpoint or vice versa?
(b) Does Steroid prefer Hotpoint to Jacuzzi or vice versa?
(c) Does Steroid prefer Westinghouse to Jacuzzi or vice versa?
(d) Does Coach Steroid have transitive preferences?
(e) After several losing seasons, Coach Steroid decides to change his way of judging players. According to
his new preferences, Steroid prefers player A to player B if player A is better in all three of the characteristics
that Steroid values, and he prefers B to A if player B is better at all three things. He is indifferent between A
and B if they weigh the same, are equally fast, and are equally obedient. In all other cases, Coach Steroid
simply says “A and B are not comparable.”
(f) Are Coach Steroid's new preferences complete?
(g) Are Coach Steroid's new preferences transitive?
(h) Are Coach Steroid's new preferences reflexive?
4. Niranjan likes both apples and bananas. He consumes nothing else. The consumption bundle where Niranjan
consumes Xa number of apples per year and Xb dozens of bananas per year is written as (Xa, Xb). Last year,
Niranjan consumed 20 number of apples and 5 dozen of bananas. It happens that the set of consumption
bundles (Xa, Xb) such that Niranjan is indifferent between (Xa, Xb) and (20, 5) is the set of all bundles such
that Xa = 100 = Xb. The set of bundles (Xa, Xb) such that Niranjan is just indifferent between (Xa, Xb) and
the bundle (10, 15) is the set of bundles such that Xa = 150 = Xb.
(a) On the graph below, plot several points that lie on the indifference curve that passes through the point (20,
5), and sketch this curve, using blue ink. Do the same, using red ink, for the indifference curve passing through
the point (10, 15).
(b) Use pencil to shade in the set of commodity bundles that Niranjan weakly prefers to the bundle (10, 15).
Use blue ink to shade in the set of commodity bundles such that Niranjan weakly prefers (20, 5) to these
For each of the following statements about Niranjana’s preferences, write “true” or “false”.
(c) (30, 5) ~ (10, 15)
(d) (10, 15) > (20, 5).
(e) (20, 5) ≥ (10, 10).
(f) (24, 4) ≥ (11, 9:1).
(g) (11, 14) > (2, 49).
(h) A set is convex if for any two points in the set, the line segment between them is also in the set. Is the set
of bundles that Niranjan weakly prefers to (20, 5) a convex set?
(i) Is the set of bundles that Niranjan considers inferior to (20, 5) a convex set?
(j) The slope of Niranjana’s indifference curve through a point, (Xa, Xb), is known as his marginal of at that
point.
(k) Remember that Niranjana’s indifference curve through the point (10, 10) has the equation 𝑥𝐵 = 100/𝑥𝐴 .
Those of you who know calculus will remember that the slope of a curve is just its derivative, which in this
case is −100/𝑥𝐴2 (If you don't know calculus, you will have to take our word for this.) Find Niranjana’s
marginal rate of substitution at the point, (10, 10).
(l) What is his marginal rate of substitution at the point (5, 20)?
(m) What is his marginal rate of substitution at the point (20, 5)?
(n) Do the indifference curves you have drawn for Niranjana exhibit diminishing marginal rate of substitution?