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:

Liquidating Dividend

A type of dividend paid by a company from its capital rather than its earnings, often during dissolution or winding down.

Date of Record

The cut-off date set by a company in order to determine which shareholders are eligible to receive a dividend or distribution.

Earnings Per Share

Earnings per share (EPS) is a financial metric that represents the portion of a company's profit allocated to each outstanding share of common stock, indicating the company's profitability.