A) An individual's Marginal Rate of substitution is different at every point along his or her price consumption path.

B) Quasi-Linear utility, Cobb-Douglas utility, and perfect substitutes are each able to characterize an individual having interior and corner solutions for a positive level of consumption.

Solutions

Expert Solution

A) True

Reason: MRS = Slope of indifference curve and also

MRS = Px/Py

Along the price consumption path, as price of a good, say px changes, so will MRS

Thus, MRS is different at every point along the price consumption path

B) False

Reason: While substitutes have corner solutions, cobb douglas have interior solutions and not corner solution

Rahul Sunny answered 2 years ago

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