Purchase pop and chips at the same convenience store

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True or False. Provide a short explanation.

a. Hillary and Donald both purchase pop and chips at the same convenience store. They have different tastes for pop and chips, so Hillary buys 3 cans of pop and 10 bag of chips whereas Donald buys 15 cans of pop and 2 bags of chips. If they both have well-behaved (monotonic and diminishing MRS) preferences, then Hillary's marginal rate of substitution between cans of pop and bags of chips is lower than Donald's.

b. Michelle's income increases so she consumes less pizza. Therefore, her preferences are not monotonic.

c. Ann was maximizing her utility subject to her budget constraint. After a price change she chose a new bundle and was better off. Therefore, she could not afford her new bundle before the price change.

d. Suppose that a consumer only purchases two goods. It is possible for both goods to be luxury goods at the same time.

e. A good can be inferior at all income levels.

Reference no: EM131405672

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