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Economics

The absolute value of Mars’ MRS at his current consumption bundle is strictly greater than 2. Mars has convex preferences. Which of the following statements is (are) true? Justify your answer graphically.

1. Taking away some of good 1 and giving Mars 2 units of good 2 for each unit of good 1 taken away will necessarily make him worse off.

2. Taking away some of good 1 and giving Mars 2 units of good 2 for each unit of good 1 taken away will necessarily make him better off.

3. Giving Mars some of good 1 and taking away 2 units of good 2 for each unit of good 1 he is given will necessarily make him worse off.

4. Giving Mars some of good 1 and taking away 2 units of good 2 for each unit of good 1 he is given will necessarily make him better off.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91421445

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