Which of the following statements are correct?

(A). Consumer's preferences are monotonic if and only if between any two bundles, the consumer prefers the bundle which has more of at least one of the goods and no less of the other good as compared to the other bundle.
(B). The tendency for the MRS to fall with increase in quantity of goods is known as the Law of Diminishing Marginal Rate of Substitution.
(C). A decrease in income causes a parallel outward shift of the budget line.
(D). The budget set is the collection of all bundles that the consumer can buy with their income at the prevailing market prices.

Choose the correct answer from the options given below:

(A), (B) and (D) only

The correct answer is Option (1) → (A), (B) and (D) only

(A). Consumer's preferences are monotonic if and only if between any two bundles, the consumer prefers the bundle which has more of at least one of the goods and no less of the other good as compared to the other bundle.True. Monotonic preferences mean that a consumer always prefers more of a good to less, as “more is better.” So, if one bundle has more of at least one good and no less of the other, it will be preferred.
(B). The tendency for the MRS to fall with increase in quantity of goods is known as the Law of Diminishing Marginal Rate of Substitution. True. As a consumer substitutes one good for another, the Marginal Rate of Substitution (MRS) decreases — showing the Law of Diminishing MRS. Indifference curves are convex to the origin because of this law.
(C). A decrease in income causes a parallel outward shift of the budget line. False. A decrease in income causes the budget line to shift inward (toward the origin), not outward. The shift is parallel because prices remain unchanged. An outward shift would be caused by an increase in income.
(D). The budget set is the collection of all bundles that the consumer can buy with their income at the prevailing market prices.True. The budget set (or opportunity set) is the collection of all consumption bundles that a consumer can afford, which includes all bundles on the budget line (where all income is spent) and all bundles inside the budget line (where income is not fully spent).