Tea drinkers are particular about how much sugar should be in a cup of tea. A and Bmust have one unit of sugar for every 12 units of tea. Somehow A and B's host put allthe tea in one room and all the sugar in the other, so A has 10 units of sugar and Bhas 120 units of tea. Looking at their consumption in an Edgeworth box, with tea onthe horizontal axiz, the contract curve isA non-linear curve that is convex to A's x-axis connecting their origins.A non-linear curve that is convex to B's x-axis connecting their origins.A straight line connecting their origins.A right angle that runs directly along A's x-axis and B's y-axis connecting theirorigins.O A right angle that runs directly along B's x-axis and A's y-axis connecting theirorigins. Consider an economy where all consumer preferences exhibit diminishing marginalutility over all goods. Also assume that all firms have diminishing marginal productsfrom their inputs. This economy is productively efficient when (select all that apply)| All goods that are produced are consumed.| Consumers' marginal rates of substitution are equal.All firms equal marginal rates of transformation.| Firms' marginal rates of transformation equal consumers' marginal rates ofsubstitution.4.Consider the utility function over money (x):u = x.Which of the following statements are true about this consumer's preferences?| They are risk averse| They are risk neutral| They are risk loving| They will always fully insure| They will potentially offer insurance to a risk averse person.

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Consider the utility function over money (x): u = x. Which of the following statements are true about this consumer's preferences? They are risk averse They are risk neutral They are risk loving They will always fully insure They will potentially offer insurance to a risk averse person.

Consider the utility function over money (x): u = x. Which of the following statements are true about this consumer's preferences? They are risk averse They are risk neutral They are risk loving They will always fully insure They will potentially offer insurance to a risk averse person.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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