Question

Q2. What do you mean by the term ‘monotonic preference’?

Answer 1

Monotonic preference is an assumption that consumers would prefer more rather than less of the goods they consume. If we compare 2 consumption bundles and one of the bundles has more of all the goods under consideration, that bundle is preferred by the consumer. For example, if bundle (X1, X2) is 5 cookies and 3 cupcakes and bundle (Y1, Y2) is 7 cookies and 5 cupcakes, the assumption of monotinicity tells us that bundle (Y1, Y2) is the more preferred bundle. This is so because there are more of both goods. This assumption would also hold if (Y1, Y2) contained 5 cookies and 5 cupcakes. In this case, there is the same amount of one good, but there is more of the other good.

HOPE THIS HELPS YOU....

Answer 2

Monotonic preferences means that a rational consumer always prefers more of a commodity as it offers him a higher level of satisfaction .