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:

Stamp Act

A 1765 British law that imposed a tax on the colonies by requiring them to purchase and use stamped paper for legal documents, newspapers, and other publications, leading to widespread protest in the American colonies.

Colonial Protests

Acts of resistance or demonstration by colonial populations against the policies, rules, or taxes imposed by colonial powers or governing entities.

Patrick Henry

An American attorney, planter, and orator best known for his declaration to the Second Virginia Convention: "Give me liberty, or give me death!"

Tea Act

A 1773 law passed by the British Parliament to reduce the massive amount of tea held by the financially troubled British East India Company in its London warehouses and to help the struggling company survive.