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:

Statement (A) -> Correctly defines monotonic preferences where more is preferred to less.

Statement (B) -> Correctly states the Law of Diminishing MRS where willingness to substitute decreases.

Statement (C) -> INCORRECT. A decrease in income causes a parallel INWARD shift, not outward shift of the budget line.

Statement (D) -> Correctly defines the budget set as all affordable bundles.

Hence, Option 1: (A), (B) and (D) only -> Statement (C) is incorrect because a decrease in income reduces purchasing power, shifting the budget line toward the origin (inward shift), while the slope remains unchanged as relative prices don't change. An increase in income would cause an outward shift. Statements (A), (B), and (D) are all theoretically correct definitions in consumer theory. -> correct