For an Individual Consumer, a Corner Solution May Be Optimal

question 95

Multiple Choice

For an individual consumer, a corner solution may be optimal such that MRS and MRT are not equal,

• A) but this is not possible in an Edgeworth Box due to the transitivity of preferences.
• B) but this is not possible in an Edgeworth Box because price ratios must be positive.
• C) and this may also occur in an Edgeworth Box.
• D) and this may only occur in an Edgeworth Box under the perfect complements case.

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Definitions:

Laissez-faire Capitalism

An economic philosophy advocating for minimal government intervention in the market.

Minimal Government Intervention

Minimal government intervention refers to an economic policy or philosophy where the government has a very limited role in the economy, allowing the market to operate with minimal regulatory influence.

Market System

An economic system where decisions regarding investment, production, and distribution are guided by the price signals created by the forces of supply and demand.

Self-interest

Acting in a way that is most beneficial for oneself.