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Unformatted text preview: C. cannot be aggregated among different individuals to measure welfare. D. All of the above. 9. Jenny’s mobile phone company has offered her a choice between the following billing plans: Plan A: Pay $0.05 per call. Plan B: Pay an initial $2 per week, which allows her up to 30 free calls. Any calls over 30 per week cost $0.05 per call. If her income is $12 per week and the other good costs $1 per unit, plot her budget constraint for the two goods under the two plans. Which plan would she choose? Will your answer change if the cost per call in Plan B is reduced from $0.05 to $0.04? 10. “If James is forced (e.g., by his parents or the government) to consume a certain quantity of a particular commodity, his level of utility will be lower than if he can freely allocate his income.” With the help of a diagram, prove or disprove the statement. Does this prove that “free choice is the best choice”? Discuss....
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