Is the perfect substitute preference consistent with monoton
Is the perfect substitute preference consistent with monotonicity? could you explain why or why not?
Solution
Goods are desirable when the consumer prefers consuming more of a good to consuming less. Suppose one bundle of goods is quantity of cake and an ice-cream. After consuming few quantity of both, more of cake and ice-cream may not be welcome. This is where the assumption of monotonicity is inappropriate. If the goods are generally defined, say, education or housing, then monotonicity is a very reasonable assumption.
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