Analyze the following statements to see if they are true or false and then explain your...

Analyze the following statements to see if they are true or false and then explain your answer.

A. In a two-good world, complements would have right-angle indifference curves.

B. Shepherd's Lemma explains how the Marshallian demand curves can be derived from the expenditure function.

C. If V is the indirect utility function, h is Hicksian demand and X is Marshallian demand, then h (P, V(P, I)) = X ( P, I)

D. Persons with consistent preferences exhibit diminishing marginal rates of substitution.

E. Economic models which are inaccurate descriptions of the real world are not of much use in predicting behavior of analyzing polices.

F. The Hicksian demand curve is steeper than the Marshallian demand curve.

G. A flat rate income tax could increase the work effort (hours worked) of the population compared to a graduated tax, even if everyone ended up paying more in taxes.

Expert Solution

Rahul Sunny answered 2 years ago

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