Question 9
Now consider the set of points \(S\) that are chosen for some \((y,p_{1},p_{2})\). Can we learn the consumer’s preferences on this set, i.e. will we be able to know for any \(x,x^{{}^{\prime}}\in S\) whether ≻, ≺ or ∼?
Correct: yes
False: no
Explanation:
We could slightly perturb the indifference curves in the region that is never observed without changing any observations under any \((y,p_{1},p_{2})\). Hence the indifference curves in the unobserved region cannot be learned.