QUESTION 11 11. Suppose you live in a two-good society with Good X and Good Y. T

Question

QUESTION 11 11. Suppose you live in a two-good society with Good X and Good Y. The fact that you spend no money on Good X Oa implies that you do not derive any satisfaction from Good X. Ob implies that you are at a comer solution. Oimplies that MRS does not equal the price ratio. Od.Any of the above are possible. QUESTION 12 12. When you maximize utility, you find that your MRS of Good X for Good Y is greater than Px/Py. It is mostly a your preferences are incomplete b. your preferences do not saisty transitivity. o.you are rot consuming Good X. likely that o d. you are not consuming Good Y

Explanation / Answer

The fact that I do not spend any money may be due to me being at the corner solution. Also the Good X may not be giving additioal satidfaction to me which is why I have become saturated and stopped consuming X. The last option is also possible that MRS is not equal to price ratio.

So any of the above options are possible.

MRS is greater than Px/Py will mean that the consumer is willing to buys more of X. This will go on until the MRS equals the price ratio. The consumer is therefore not consuming good Y here.

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