Mary Gail has a different price– consumption curve associated with each possible income level. If two of these curves intersect, are Mary Gail’s preferences rational?
Answer to relevant QuestionsAssume that Dan’s income–consumption curve for potatoes is a vertical line when potatoes are on the horizontal axis. Show that Dan’s demand curve for potatoes must be downward sloping.Tony currently goes to the dentist twice a year at $ 150 per visit. His employer subsidizes Tony’s purchases by paying half the cost of each dental visit in excess of one visit per year. (No subsidy is granted on the first ...We assumed in the text that families receive the public school subsidy at no direct cost. Yet families pay property (and other) taxes that are used to finance schools. Does this fact invalidate the analysis in the text? Define efficiency and inefficiency in the context of the distribution of goods between two consumers. If the distribution lies inside an Edgeworth box, how does knowledge of the consumers’ marginal rates of substitution ...Assume that the marginal product of each input employed by Microsoft depends only on the quantity of that input employed (and not on the quantities of other inputs), and that diminishing marginal returns hold for each input. ...
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