The fact that Alice spends no money on travel:
A) implies that she does not derive any satisfaction from travel.
B) implies that she is at a corner solution.
C) implies that her MRS does not equal the price ratio.
D) any of the above are possible.

Question

Quizplus · Accepted Answer

Alice spending no money on travel could mean she derives no satisfaction from it (A), she is at a corner solution where she chooses not to consume travel at all (B), or her marginal rate of substitution (MRS) does not equal the price ratio, indicating she does not find travel worth the cost (C). Any of these interpretations could be valid.

The Fact That Alice Spends No Money on Travel