Use the Following Statements to Answer This Question: I

question 89

Multiple Choice

Use the following statements to answer this question: I. The equal marginal principle may be used to characterize the maximum utility consumption decision even if the diminishing MRS assumption does not hold.
II) The equal marginal principle implies that the MRS at the optimal consumption bundle is always equal to the price ratio.

• A) I and II are true.
• B) I is true and II is false.
• C) II is true and I is false.
• D) I and II are false.

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Definitions:

Simple Interest

Simple interest is a method of calculating interest where the interest charge is based on the original principal amount and does not accumulate or compound over time.

Variable Interest Rate

An interest rate that can fluctuate over time, usually based on underlying economic indicators or indices.

Pay Off

To completely repay the outstanding balance of a loan or debt.

Simple Interest

An interest calculation method where the interest charge is based on the original principal amount of a loan or deposit and does not accumulate or compound.