If a consumer has monotonic preferences, can she be indifferent between the bundles (10, 8) and (8, 6)?
No, the consumer cannot be indifferent between the bundles (10, 8) and (8, 6).
According to monotonic preferences, if a bundle has more of at least one good and no less of the other good compared to another bundle, the consumer prefers the bundle with more goods.
Comparing the two bundles: Bundle (10, 8) has 10 units of good 1 and 8 units of good 2, while Bundle (8, 6) has 8 units of good 1 and 6 units of good 2. Bundle (10, 8) has more of both goods compared to (8, 6).
Since (10, 8) has more of at least one good and no less of the other good, the consumer with monotonic preferences would prefer (10, 8) over (8, 6). Therefore, she cannot be indifferent between these two bundles.
Explanation
The textbook clearly defines monotonic preferences: if one bundle has more of at least one good and no less of the other compared to another bundle, the consumer strictly prefers it. Bundle (10, 8) dominates (8, 6) in both goods, so the consumer must prefer (10, 8). Indifference is impossible when one bundle is strictly preferred.
Solution Steps
Step 1: Compare bundles (10, 8) and (8, 6) - (10, 8) has more of both goods
Step 2: Apply monotonicity definition - consumer prefers bundle with more goods
Step 3: Conclude that indifference is not possible since (10, 8) is strictly preferred