If a Person Is Consuming Two Goods,the Rational Spending Rule

question 146

Multiple Choice

If a person is consuming two goods,the rational spending rule requires that

• A) total expenditure on the two goods be equal.
• B) total utility from the two goods be equal.
• C) average utility from the two goods be equal.
• D) the extra utility from the last dollar spent on one good equals the extra utility from the first dollar spent on the other good.
• E) the ratio of marginal utility to price be equal for the two goods.

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Definitions:

Right of First Refusal

A legal right allowing the possessor to initiate a business deal with the owner of an asset, prior to the owner having the right to engage in that deal with another party.

Injunction

A court order requiring an individual to do or cease doing a specific action.

Reformation

A legal process to correct or modify a written agreement or document that inaccurately reflects the parties' intentions due to error or fraud.

Punitive Damages

Financial compensation awarded to a plaintiff to punish the defendant for especially harmful behavior, beyond simple compensation.