Identify the true and false statements:

1. If net benefits are negative where marginal costs equal marginal benefits the level of a finely divisible action should be set at zero.

2. In order for net benefits to be maximized at a particular activity level it must be the case that marginal benefits equal marginal costs.

3. If marginal benefits are given by MB = 5 - x and marginal costs are given by MC = 10 + x the value of x which maximizes net benefits is 0.

4. An increase in the price of corn results in a downward shift in the demand curve for corn.

5. When the demand curve shifts, the change in equilibrium price will be smaller the closer the price elasticity of supply is to 0.

6. A good whose income elasticity of demand is negative is called an inferior good.

7. If the price elasticity of demand is -2 at a price of $5 and a quantity of 750 units the equation of a linear demand curve consistent with that information is Q = 2250 — 300P

8. If MUx/Px> MUy /Py at the best affordable bundle with goods X and Y the individual will not consume any of good Y.