The price of a pack of Pokemon cards is $5, and the price of a pack...

 

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The price of a pack of Pokemon cards is $5, and the price of a pack of baseball cards is $3. Suppose Will, whose preferences are rational, monotonic, and convex, uses all of his income to buy 5 packs of Pokemon cards and 5 packs of baseball cards. At this consumption bundle, you could take away four packs of Pokemon cards if you give him 7 packs of baseball cards and his utility would not change. Which of the following must be true? Will could increase his utility by buying more Pokemon cards and fewer baseball cards O Will could increase his utility by buying more baseball cards and fewer Pokemon cards O Will could increase his utility by buying fewer Pokemon cards and fewer baseball cards O Will is already at his utility maximizing bundle O None of the above The price of a pack of Pokemon cards is $5, and the price of a pack of baseball cards is $3. Suppose Will, whose preferences are rational, monotonic, and convex, uses all of his income to buy 5 packs of Pokemon cards and 5 packs of baseball cards. At this consumption bundle, you could take away four packs of Pokemon cards if you give him 7 packs of baseball cards and his utility would not change. Which of the following must be true? Will could increase his utility by buying more Pokemon cards and fewer baseball cards O Will could increase his utility by buying more baseball cards and fewer Pokemon cards O Will could increase his utility by buying fewer Pokemon cards and fewer baseball cards O Will is already at his utility maximizing bundle O None of the above

Answer rating: 100% (QA)

2 Let pokemon card be denoted by P and baseball card by B Marginal Rate of Substitution MRS of pokem... View the full answer