Which of the following statements is not true? Select one: a. If tea and coffee

Question

Which of the following statements is not true? Select one: a. If tea and coffee are perfect substitutes in your consumption, then you will only consume the good with the lowest price. O b. If tea and coffee are perfect substitutes in your consumption, then you will consume some quantity of both goods if the prices of tea and coffee are equal. O c. You view coffee and donuts as perfect complements, and the corners of your indifference curves follow the 45-degree line. As long as your income and the prices of coffee and donuts are positive, you will not choose a corner solution. o d. You view coffee and donuts as perfect complements, and the corners of your indifference curves follow the 45-degree line. You will consume coffee and donuts at some point along the 45-degree line where your MRS equals the price ratio for the two goods.

Explanation / Answer

(a) is true since when two goods are perfect substitutes we try to consume any one of them and it is rational to consume the one with lowest price .

(b) is also true

(c) not true . In case of perfect compliments equilibrium exist at the corner of an indifference curve .

(d) it is true .

Answer : c

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