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      Question

      If Y is preferred over X lexicographically. If income is

      100 and price of x=1 and price of y is10, then at optimal bundle the total amount of X is
      A 100 Correct Answer Incorrect Answer
      C Either a or b Correct Answer Incorrect Answer
      D More information is needed. Correct Answer Incorrect Answer

      Solution

      In the case of lexicographic preference, (where Y is lexicographically preferred over X), at optional bundle the consumer will consume only Y (as he is getting more utility if he consumes more Y). So, at optimal bundle X=0 and Y = M/Py =10.  

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