Question

1. Circle TRUE or FALSE: if an agent’s wealth comes purely from an endowment bundle, then the agent’s budget line must always pass through his endowment.

2. Circle TRUE or FALSE: for certain agents, if bundle B is strictly preferred to bundle C, it is sometimes possible to find a mixture of B and C that is strictly preferred to both B and C.

3. Suppose that Tara’s endowment is (100,25), good x is the numéraire, and ?? = 13. What is the y-intercept of Stefani’s budget line?

Answer 1

1) True

2) False

3) y= 32.69

Explanation

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