Suppose You Have Spent Your Entire Budget And, for All

question 154

Multiple Choice

Suppose you have spent your entire budget and, for all the goods you purchase, the marginal utilities per dollar spent are identical.Which of the following is true?

• A)You are being irrational.
• B)You can increase your utility by reallocating your income.
• C)You will reduce your utility if you allocate income in any other way.
• D)You are minimizing your marginal utility.
• E)You can avoid diminishing marginal utility.

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Definitions:

Interest

A fee for the benefit of loaning money, usually stated as a yearly interest rate.

Payments

These are amounts paid or to be paid by one party to another in exchange for goods or services or as repayment of a loan.

Compounded Quarterly

Interest on an investment that is calculated four times a year.

Interest

Money paid regularly at a particular rate for the use of money lent, or for delaying the repayment of a debt.