Refer to Figures D and E

Multiple Choice

Refer to Figures d and e.Bundle A is preferred to bundle B in Figure e and not in Figure d because:

A) the MRS between water in a rainy season and during a drought is higher in e than in d.
B) as the probability of a drought increases, consumers are no longer indifferent between the two bundles.
C) as the probability of a drought decreases, water in a rainy season becomes less valuable.
D) consumers are indifferent between bundles A and B as the probability of a drought increases.