Randy's Consumer Preferences Analysis: Violation of Transitivity Assumption

Explanation:

Transitivity Assumption in Consumer Preferences:

The transitivity assumption in consumer preferences is a key concept in economics that relates to the consistency of preferences among different goods or services. It is based on the idea that if a consumer prefers option A over option B, and option B over option C, then the consumer should also prefer option A over option C. This assumption forms the foundation for building consumer preference relations and utility functions in economic theory.

Analysis of Randy's Preferences:

In the case of Randy's preferences for sports, it is evident that there is a violation of the transitivity assumption. Randy's preferences can be summarized as follows:

1. Randy likes baseball more than football
2. Randy likes football more than basketball
3. Randy likes basketball more than baseball

Violation of Transitivity:

The violation of the transitivity assumption occurs because Randy's preferences create a circular order of preference that is non-transitive. The circular preference loop of baseball > football > basketball > baseball contradicts the principle of transitivity. According to the transitivity assumption, this circular preference order should not exist, as it leads to inconsistencies in consumer choice and decision-making.

Implications:

Randy's preferences represent a violation of the transitivity assumption in consumer preference theory. This violation highlights the complexity and variability of consumer preferences, which may not always adhere to strict transitive patterns. Understanding such violations can lead to further research and analysis in consumer behavior and decision-making processes in economics.