At the Optimal Consumption Bundle, Which of the Following Conditions

question 91

Multiple Choice

At the optimal consumption bundle, which of the following conditions does NOT hold?

• A) The ratio of marginal utility of any two goods is equal to the ratio of their prices.
• B) The indifference curve is tangent to the budget line.
• C) The marginal utility per dollar spent is equal for all goods consumed.
• D) The prices of the goods in the optimal bundle are equal.

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Definitions:

Compound Interest

The addition of interest to the principal sum of a loan or deposit, where the interest that has been added also earns interest.

Equal Payments

A repayment structure where payments are the same amount each period, as seen in some loans and mortgages.

Annuity Due

An annuity whose payments are made at the beginning of each period.

Future Amount

The expected value of an asset or amount of money at a specific date in the future, often factoring in variables like interest rates and compounding periods.