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. 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. 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 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. O

Explanation / Answer

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 wil not choose a corner solution.

Consumer will consume corner solution in case of complementary goods. Solution of complementary goods lie on the 45-degree line. When income and prices of coffee and donuts are positive, you will choose a corner solution. All other options are correct.

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