Which one of the following statements is definitely correct for the marginal rate of substitution MRS(x1,x2) = dx2/dx1 of some continuous preferences over bundles of x1 and x2 with prices p, and p2, respectively? a) If the preferences over x1 and x2 are strictly monotone, MRS(x1,x2) < 0. b) If the preferences over x1 and x2 are strictly convex, ÔMRS(x1,x2)/ðx1 < 0 and ƏMRS (x1, x2)/dx2 > 0. c) For strictly monotone preferences, at a corner solution (xi, x;), MRS(x¡,x;) = P1/p2. d) For strictly monotone and strictly convex preferences, if at a point (x1, x2) on the budget line MRS(x1,x2) > P1/P2, then the optimum bundle (x, x;) lies where xi < x1 and x > X2.

Which one of the following statements is definitely correct for the marginal rate of substitution MRS(x1,x2) = dx2/dx1 of some continuous preferences over bundles of x1 and x2 with prices p, and p2, respectively? a) If the preferences over x1 and x2 are strictly monotone, MRS(x1,x2) < 0. b) If the preferences over x1 and x2 are strictly convex, ÔMRS(x1,x2)/ðx1 < 0 and ƏMRS (x1, x2)/dx2 > 0. c) For strictly monotone preferences, at a corner solution (xi, x;), MRS(x¡,x;) = P1/p2. d) For strictly monotone and strictly convex preferences, if at a point (x1, x2) on the budget line MRS(x1,x2) > P1/P2, then the optimum bundle (x, x;) lies where xi < x1 and x > X2.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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