Refer to Figure 9.2. At price 0E and quantity Q, the deadweight loss is
A) 0ACQ.
B) 0ECQ.
C) 0FCQ.
D) EFC.
E) none of the above
Question 2
Pedro buys market basket A that includes 10 books at a price of 20 per book and 10 DVDs at a price of 10 per DVD. Market basket B contains 12 books and 12 DVDs. Based on this information, which of the following statements is NOT true?
A) Revealed preference analysis implies that Pedro only prefers basket B to basket A if basket A is more expensive.
B) Pedro prefers market basket B to basket A.
C) Market basket B will cost more than basket A.
D) If the prices change and Pedro chooses market basket C, which now costs the same as basket B, then basket C is prefer to basket A.
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