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1. TFU and Explain:
a. Daniel consumes food and newspapers. Given that these are the only two goods he consumes, it is possible for both food and newspapers to be inferior goods for Daniel.
b. Sister Prudence, a nun in the Carmelite order (a Catholic religious order), has taken a vow of poverty. Her preferences must therefore violate one of the assumptions underlying utility theory.
c. If all prices and all income increases by 10%, it should not affect the optimal choice or wellbeing of the consumer. Because of that, inflation is not important.
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