The Relative Price Rule Says That at the Optimal Consumption

question 273

Multiple Choice

The relative price rule says that at the optimal consumption bundle the marginal rate of substitution between two goods must be equal to their relative price.This is equivalent to saying that:

• A)the marginal utility per dollar is the same for both goods.
• B)the marginal utility of each good consumed must be the same.
• C)goods should be consumed in the same ratio as their relative
• D)price.the MRS is not equal to the ratio of marginal utilities.

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Definitions:

Redeemed

Refers to the process of exchanging a financial instrument, such as a bond or coupon, for its cash value or for another specified benefit.

Specified Price

The agreed-upon price for goods or services stipulated in a contract.

Shareholder's Derivative Suit

A legal action initiated by a shareholder on behalf of the corporation against a third party, often the corporation's executives or directors, for mismanagement or fraud.

Corporate Directors

Individuals elected by shareholders to oversee the management of a corporation and ensure that it is being run in accordance with their interests.