Chocolate C A D E IC2 IC1 B Strawberries 21. Alexander buys chocolate and strawberries to maximize his feasible happiness. The figure shown here describes his current situation, with a given budget line and a selection of a couple of indifference curves. Which one of the following statements is false? A. Bundle E is feasible but does not maximize Alexander's happiness among all feasible bundles. B. Bundle A is not Alexander's optimal bundle because the bang-per-buck with strawberries is greater than the bang-per-buck with chocolate at bundle A. C. Bundle D is Alexander's optimal bundle because he has spent all his income and the $\frac{MU_{strawberries}}{MU_{chocolate}} = \frac{P_{strawberries}}{P_{chocolate}}$. D. Any point on the budget line strictly between bundles A and B are preferred by Alexander to bundle E. E. Bundle B is not Alexander's optimal because at bundle B $\frac{MU_{strawberries}}{P_{strawberries}} > \frac{MU_{chocolate}}{P_{chocolate}}$.
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This statement is true. Bundle E is feasible because it lies on the budget line, but it does not maximize Alexander's happiness because there are other feasible bundles that lie on higher indifference curves. Statement B: Bundle A is not Alexander's optimal Show more…
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