Bundle a Contains 10 Units of Good X and 5

question 208

Multiple Choice

Bundle A contains 10 units of good X and 5 units of good Y. Bundle B contains 5 units of good X and 10 units of good Y. Bundle C contains 10 units of good X and 10 units of good Y. The consumer is indifferent between bundle A and bundle B. Assume that the consumer's preferences satisfy the four properties of indifference curves. Which of the following statements is correct?

• A)The consumer must prefer bundle C to either bundle A or B.
• B)Bundle A and bundle B lie on the same indifference curve.
• C)The consumer must prefer bundle B to bundle C.
• D)Both a) and b) are correct.

Understand the significance of the First Theorem of Welfare Economics.

Distinguish between different types of utility functions (e.g., perfect substitutes, perfect complements).

Derive conclusions about consumption and trade patterns based on utility functions.

Grasp the implications of quasilinear utility functions for Pareto optimal allocations.

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