Question:

How do i know if a set of bundles forms a convex set?

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this problem says that the set is the set of bundles that Edward weakly prefers to the bundle (20, 6). does this set of bundles form a convex set?

The two curves given were: (xA, xB) and (25,4) have the equation: xA = 100/xB

and (xA, xB) and (20,6) have the equation: xA= 120/xB

so how do i know if the set of bundles weakly preferred to (20,6) forms a convex set?

please help!!

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2 ANSWERS


  1. In a convex set, the shortest path between any 2 points (even for points on the boundary) passes through points all of which belong to the set. In the examples you've mentioned, the curves are Hyperbolic in nature. Any 2 points on the curve (Hyperbola) passes through points that are external to the set; hence not convex.


  2. plot y = 100/x (for x>0),

    fill in the area above the curve, and

    ask yourself whether it is convex.

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