Would these be true or false and why? -a consumer with positive marginal utility

Question

Would these be true or false and why? -a consumer with positive marginal utility for each good will always choose a bundle on her budget line. -if darren views milk chocolate and dark chocolate as perfect substitutes, then he buys whatever is cheaper. -Rita has well-behaved preferences over steak and fries. at her current consumption bundle of 3 steaks and 10 fries, her marginal rate of substitution between steak and fries is 1/2 (in absolute value). if you offered to take away one fry and give her a steak, she would take that offer.

Explanation / Answer

Would these be true or false and why? -a consumer with positive marginal utility for each good will always choose a bundle on her budget line. This is true. A bundle inside the budget line will give less marginal utility, while a bundle outside the budget line is unattainable, so a bundle on the budget line must be chosen. -if darren views milk chocolate and dark chocolate as perfect substitutes, then he buys whatever is cheaper. True. If they are perfect substitutes then he is indifferent between them, so he will buy the cheaper one. -Rita has well-behaved preferences over steak and fries. at her current consumption bundle of 3 steaks and 10 fries, her marginal rate of substitution between steak and fries is 1/2 (in absolute value). if you offered to take away one fry and give her a steak, she would take that offer. True. This marginal substitution rate means that at this consumption level, Rita is willing to give up 1 steak for 2 fries or 2 fries for 1 steak. Since you are offering a better deal, she will take it. You are offering a substitution rate of 1:1 instead of 1:2.

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