Don currently consumes positive quantities of both x1and x2. At this point, the absolute value of his MRS21is smaller than the price ratio p1/p2. From this we can definitely conclude that:

A. He is not exhausting his entire budget.

B. He would be better off at a corner solution consuming only x2.

C. He would be better off consuming more of x1and less of x2.

D. None of the other answers is correct.

E. He would be better off consuming less of x1and more of x2.

If a utility function u() represents a consumer's preference relation , then:

A. Any positive monotonic transformation of u() will also represent the consumer's preferences.

B. u(A) u(B) if and only if A B.

C. All bundles on an indifference curve will have the same value of u().

D. u() assigns larger numbers to indifference curves that are more highly ranked by the consumer.

E. All of the other answers are correct.