The following combinations of goods X and Y represent various market baskets. Consumption is measured in pounds per month
Market Basket Units of X Units of Y
A 4 6
B 16 7
C 15 3
D 3 2
Explain which market basket(s) is(are) preferred to other(s), and if there is any uncertainty over which is preferable, point this out as well.
Since more of each good is preferred to less, we can conclude that a market basket is preferred to an alternative basket if it lies above and to the right of the alternative basket.
Combination B is preferred to all others. A and C cannot be compared without additional information. A and C are both preferred over D.
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What will be an ideal response?