The Strong Axiom of Revealed Preference Requires That If a Consumer

question 41

True/False

The strong axiom of revealed preference requires that if a consumer chooses x when he can afford y and chooses y when he can afford z, then he will not choose z when he can afford x.

---

Definitions:

Striking Price

The set price at which an option's holder is allowed to purchase or sell the asset underlying the option.

Stock Put Option

A financial derivative that gives the holder the right, but not the obligation, to sell a specified quantity of a stock at a set price within a certain time period.

Expiration Time

The specific date and time when an options or futures contract becomes void and the rights to exercise it cease.

Call Contract

An options contract that gives the holder the right to buy an underlying asset at a specified price within a certain period.