1 True or False and explain briefly a The assumption that mo

(1) True or False, and explain briefly. (a) The assumption that more is better implies that indifference curves are down ward sloping. (b) Consider the following three bundles: A = (3,7), B = (7,3) and C = (6,6). If bundle A and bundle B are on the same indifference curve of a consumer, and the preferences of this consumer satisfy all the assumptions introduced in class then this consumer must prefer bundle C to bundle A. (c) The utility functions U(x, y) ry and U(x, y)-y represent the same prefer- aces over bundles of goods.

Solution

1.False.MRS implies that indifference curves are downward sloping.

2.True.Bundle C gives more utility to consumer(12), than bundle A and B(10)

3.False.Both the indifference curves are different and have different MRS.So, they can\'t represent same preferences.