Answer:
Lego manufactures plastic toys, produced under the Lego Group. Some special products of this company are mini-figures, interlocking plastic bricks and other parts of toys. On the other side, Disney is a multinational entertainment and mass media conglomerate. The company has created various animated characters like Miki Mouse and Mini Mouse for people of all age group (Hennig-Thurau and Houston 2019). Thus, Lego and Disney are not competitors. Rather, Lego operates as the partner of Disney, as it receives franchises to produce various Disney toys and games. The mission of Disney is to the leading producers as well as providers of information and entertainment (Danciu 2016). Thus, it intends to attract boys and girls, aged between 4 years to 12 years. Moreover, teenage children are also considered as the chief customers of this company. Lego also manufactures products for the same range of customers.
Adam’s budget line is:
50 = 2 * Apple + 1 * Banana
In this context, income of Adam is 50 while price of one unit apple is 2 and price of one unit banana is 1 (Cherchye, Demuynck and De Rock 2014).
New budget equation of Adam is:
50 = 2* Apple + 5 * banana
After increase in price of banana, the budget line of Adam shifts from D0 to D1 towards left.
This implies that Adam will purchase banana by less amount than before.
The second new budget equation of Adam is:
50 = 1 * Apple + 10 * banana
Therefore, the new budget line of Adam is:
After price increase of apple and decrease in price of apple, Adam will buy more apples and fewer amounts of bananas.
New budget line of Adam is:
250 = 10A + 5 B
The new budget line is same as initial one. Income of the person increases while at the same time price of apple and banana change.
In economics, the term “preference to be complete” is related with consumer behaviour. In this context, it is assumed that each person has a preference on any two bundles of goods. Within these two set of goods, the consumer can easily rank them based on preferences (Gordon and Vaughan 2017). Thus, this preference of consumer can be defined completely. In this context, consumer can prefer either A to B or B to A or both.
The term “preferences to be transitive” represents the preference property of an individual. This implies that one bundle, say A, is preferred compare to other, say B. Moreover, A is always preferred to other bundle, C. Therefore, A is preferred strictly.
References:
Cherchye, L., Demuynck, T. and De Rock, B., 2014. Revealed preference analysis for convex rationalizations on nonlinear budget sets. Journal of economic theory, 152, pp.224-236.
Danciu, V., 2016. Corporate Reputation: How it Works for Company's Performance. Romanian Economic Journal, 19(62).
Gordon, D. and Vaughan, R., 2017. Thick Indifference Curves, Marketing and Behavioral Economics. Journal of Progressive Research in Social Sciences, 6(1), pp.422-425.
Hennig-Thurau, T. and Houston, M.B., 2019. Creating Value, Making Money: Essential Business Models for Entertainment Products. In Entertainment Science (pp. 151-231). Springer, Cham.
