If the individuals in a group of consumers have identical tastes, then the group can be treated as if it behaved as a singe representative consumer.

Answer the following statement true (T) or false (F)


False

Rationale:

Consider the indifference map below and suppose 2 individuals both share this map. Initially the first optimizes at A while the second optimizes at B. We then redistribute income so that both have the middle budget line as their constraint -- and they both optimize at C. Clearly their paths are not offsetting -- so they do not behave as if they were a single individual despite sharing the same tastes.

Economics

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