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Stony Brook University US https:/ blackboard ston brook.edu/webapps assessment/take/launch sp?course assessment id- Completion Status: QUESTION 14 The graph bellow presents the indifference curves and the budget line of Kevin for the consumption of two goods, pizzas and beer Pizza Us-30 U2-20 U1-10 Beer Based on the information provided in the graph, the true statement is OAA and C give same utility level of 20 O B. Kevin will choose D since it gives him higher utility OC. A and B give same utility level of 10 D. The best Kevin can do is to consunge C The best Kevin can do is to consune Kevin is indifferent between A and C, where he uses all his income OE. QUESTION 15

Solution

Q.14. Option D

The tangency point C represents the optimal combination of Beer and Pizza

Q.15 Option B

T- As people do not have much choice

F- This represents basic necessity which is inelastic

T- It varies with price

F- They are indentical