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

question 237

Multiple Choice

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

• A) is maximizing his/her utility.
• B) should increase his/her purchases of B and decrease the purchases of A.
• C) should spend more money on both goods.
• D) should spend less money on both goods.
• E) should increase the purchases of A and decrease the purchases of B.

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Definitions:

Central Details

The most important or essential pieces of information within a context or text.

Peripheral Details

Information that is not the central focus but can be found in the margins or periphery, often not the main point of attention.

Memory

The cognitive system that retains information and involves receiving, storing, and retrieving this information.

Schema

A cognitive framework or concept that helps organize and interpret information from the world.