1. **Problem Statement:** Given two figures showing Sam's consumption bundles of herbal tea and pancakes, and his preferences, determine which bundles Sam strictly prefers to bundle D based on each figure's information. Also, evaluate the truth of two statements about preferences. 2. **Understanding the "More is Better" Principle:** Sam always prefers more of either good, holding the other constant. 3. **From Figure 1:** - Point D is central. - E has less of both goods than D. - B, A, F, C have more pancakes but less herbal tea than D. - G has more herbal tea but less pancakes than D. - H has more of both goods than D. Since "more is better," any bundle with more of both goods than D is strictly preferred. 4. **Strict Preference from Figure 1:** - H has more of both goods than D, so Sam strictly prefers H to D. - B, A, F, C have more pancakes but less herbal tea, so preference is unclear from Figure 1 alone. - G has more herbal tea but less pancakes, so preference is unclear. - E has less of both, so not preferred. Thus, from Figure 1, only H is strictly preferred to D. 5. **From Figure 2:** - Indifference curves I1, I2, I3 show levels of utility. - E and B lie on I1 (lowest utility). - G, D, A, F lie on I2 (middle utility). - C lies on I3 (higher utility). - H lies beyond I3 (highest utility). Bundles on higher indifference curves are strictly preferred. 6. **Strict Preference from Figure 2:** - C is on I3, higher than D on I2, so C is strictly preferred. - H is beyond I3, so strictly preferred. - E and B on I1 are less preferred. - G, A, F on I2 are indifferent to D. 7. **Summary Table:** | Bundle | Figure 1 Strictly Preferred? | Figure 2 Strictly Preferred? | |--------|------------------------------|------------------------------| | A | No | No | | B | No | No | | C | No | Yes | | E | No | No | | F | No | No | | G | No | No | | H | Yes | Yes | 8. **Statements:** - "Figure 1 indicates that Sam prefers bundle C to G." - From Figure 1, C and G have trade-offs (more pancakes vs more tea), so preference is unclear. **False**. - "Figure 2 indicates that Sam is indifferent among bundles C and G." - C is on I3, G on I2, so C is strictly preferred to G. **False**. **Final answers:** - Strictly preferred to D given Figure 1: H - Strictly preferred to D given Figure 2: C, H - Statement 1: False - Statement 2: False