Please answer 1367 and explain why Thank you 1 A consumer ha

Please answer 1,3,6,7, and explain why. Thank you!

1. A consumer has the utility function u(x1 , x2) = min {x1, x2)?The T F optimal consumption bundle is independent of the price ratio. 2. The optimal consumption bundle of a utility-maximizing consumer is T F always located on his budget line. 3. The economy of a country experiences a period of inflation. Prices of all goods and services as well as all incomes increase by 15%. This leads to a shift of the budget line of a representative household. 4. Common resources are excludable and rival in consumption goods TF T F 5. For markets with negative externalities in social optimum quantities TF are greater than in equilibrium. 6. For markets with positive externalities in social optimum prices areTF greater than in equilibrium. 7. For common resources we have free-rider problem. 8. The optimal strategy for English auction is bid your value. T F T F 9. Monopolistic competition is a market structure in which firms have market power but no additional firm can enter and earn positive profits. 10.To keep firms from violating the cartel agreement, the cartel must be TF able to detect cheating and punish violators

Solution

1. True. This is because for fixed proportion we consume at the kink. At the kink our IC is tangent to only one price ratio. So, even at different price ratio, we will consume different amount of goods which will move us to a new IC.

3. FALSE

since everything is going up by 15% there won\'t be any change in the budget line.

6.true

We have SMB greater than the PMB. When our MC cost curve cuts these two curves, we get a higher prices

7. Yes, this is because the property right has not been assigned.