Question

Giving reasons state whether the following statements are true or false:
a) A consumer with monotonic preference will prefer a bundle (5,6) to (7,5).
b) MRS increases when the consumer moves downward along the indifference
curve.
c) TU decreases with fall in MU.
d) TU remains same whether MU is positive or not.
e) An economy will always operate on the PPC.
f) If the slope of the demand curve is zero, the price elasticity of demand will also
be zero.

Answer 1

Hello!!!!!

Here is the answer of your questions:---

a)) True.......
because monotonic Preferences are the analysis of Indifference Curve and under this all the combinations of good gave same level of satisfaction to the consumer.....

b)) False....
because marginal rate of substitution decreased when me move along IC......

c)) False......
because TU increases at Diminishing rate when MU falls.....

d)) False......
because MU impacts on TU as when MU is -ve then TU starts decreasing.........

e)) False.......
because when resources are not fully and efficiently utilised then an economy lies under PPC but not on that.....

f)) False........
because when slope of demand curve is zero that elasticity will be infinity means perfectly elastic......

Hope it will help u.....