Question

Answer each of the following statements True/False/Uncertain. Give a full explanation of your answer including graphs where appropriate. (When in doubt, always include a full labeled graph.)

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.

C) Consider the following three consumption bundles (X1,X2)=(10,10) ; (X1,X2)=(15,10) ; (X1,X2)=(3000,8). Non-satiation implies that (15,10) is preferred to (10,10) but does not imply that (3000,8) is preferred to (10,10).

D) It is not theoretically possible for two indifference curves to cross if the preference relations they are based on satisfy the assumptions of completeness, transitivity and non-satiation.

Answer 1

Explanation:-

Please find attached the image which contains solution for both the parts (a) (b) (c) and (d),

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