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Economics

1.The maintenance of a framework of security and order through the establishment and enforcement of rules under which people can interact peacefully with one another and be secure in their person and property is known as the a. productive function of government. b. protective function of government transfer function of government. d. illegitimate function of government o

2. Where appropriate draw graphs and explain your reasoning. 1.(4.5 points) Which assumption about consumer preferences does each of the following individuals violate? a. Adam likes basketball more than football; football more than baseball; and baseball more than basketball. b. Christina prefers prune juice to orange juice but cannot decide how she feels about grapefruitjuice. c. Blake likes superhero comic books but prefers 5 comic books to 10 comic books.

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1.The correct answer is: b. protective function of government.

The protective function of government deals with the protection of individuals and their property against acts of aggression. It involves the maintenance of a legal structure (rules) within which people interact peacefully and have a process for the settlement of disputes.

2.

A. The first assumption being violated here is TRANSITIVITY. It defines a relationship between goods , such as if a consumer prefers good A to good B and prefers good B to good C then a consumer should prefer good A to good C .

Likewise, in the above question part a , if Adam likes basketball more than football , football more than baseball , he should prefer basketball more than baseball.

B.  The assumption being violated here is COMPLETENESS .Assumption of completeness means a consumer is indifferent towards two goods. If faced with the option of apples vs guavas, every consumer does have a preference for one good over the other.

Likewise, in the above question part b , Christina will have a preference for one juice over the other. She should be able to compare her options.

C. The assumption being violated here is NON SATIATION.  It states that more of a good is always better as long as it does not affect the consumer's ability to consume other goods.For example , George will be happier with 5 apples and 3 oranges than 3 apples and 1 orange. George has no point of satiation or the ability to be satisfied. This is also called consumer greed.

Likewise , in the above question part c , Blake prefers 5 comic books to 10 comic books cannot be held true as it violates the assumption of Non Satiation. He likes superhero comics so he cannot be assumed to be satisfied with 5 comic books to 10 comic books.