Question

The assumption of transitivity says that

a. For any two bundles, the consumer can establish a preference ordering.
b. Any bundle is at least as good as itself.
c. If A is preferred to B and B is preferred to C, than A is preferred to C.
d. If bundle A is preferred to bundle B, there is a region around A such that any bundle C that lies in that region is preferred to B

Answer 1

Answer:

c. If A is preferred to B and B is preferred to C, than A is preferred to C.

Explanation:

The assumption of transitivity states that If A is preferred to B and B is preferred to then A is preferred to C. The big problem with this assumption is that these three decisions are not made at the same time and as we know that the tastes of different people may change at different point of time and hence it is not considered as an effective assumption.