Question

What is the difference between single and double peaked preferences?

a) Single peaked preferences occur when individuals have multiple preferred outcomes, while double peaked preferences involve only one preferred outcome.
b) Single peaked preferences involve a single maximum point on a preference scale, while double peaked preferences have two maximum points.
c) Single peaked preferences describe preferences with no clear preferences, while double peaked preferences have distinct preferences for every option.
d) There is no difference between single and double peaked preferences.

Answer 1

Single peaked preferences have one maximum point on a preference scale, indicating one outcome with the highest satisfaction. Double peaked preferences have two maximum points, showing two outcomes of equal highest satisfaction. Indifference curves represent these preferences graphically.

Step-by-step explanation:

The difference between single and double peaked preferences pertains to the number of maximum points on a preference scale. Single peaked preferences involve having one maximum point on the scale, indicating a person's highest utility or satisfaction from a particular outcome. On the other hand, double peaked preferences feature two separate maximum points, suggesting two different outcomes provide the same highest level of utility or satisfaction for the person.

Indifference curves are used to illustrate these preferences graphically, showing combinations of goods that provide the same level of utility. Single peaked preferences would be represented by an indifference curve with a single peak, while double peaked preferences would be indicated by an indifference curve that has two peaks. The concept of these preference curves is important in understanding consumer choice and utility-maximizing.