If a Consumer Is Spending All of His/her Income in a Manner

question 123

Multiple Choice

If a consumer is spending all of his/her income in a manner where MU_a / P_a = MU_b / P_b, then the consumer:

• A) should increase the consumption of A and decrease the consumption of B.
• B) is maximizing his/her utility.
• C) should increase the consumption of B and decrease the consumption of A.
• D) should increase the consumption of both A and B.
• E) should decrease the purchases of both A and B.