For Two Goods, a and B, the Rational Spending Rule

question 62

Multiple Choice

For two goods, A and B, the rational spending rule is expressed as:

• A)MU_A = MU_B.
• B)MU_A * MU_B = P_A * P_B.
• C)(MU_A/P_B) = (MU_B/P_A).
• D)(MU_A/P_A) = (MU_B/P_B).

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Definitions:

Relative Homogeneity Effect

Tendency to see outgroup members as all the same, and ingroup members as more differentiated.

Social Categorisation

The process of classifying people into groups based on shared characteristics, which can simplify social perception but also contribute to stereotyping.

Relative Homogeneity Effect

The tendency to perceive members of an out-group as more similar to each other than members of the in-group, often leading to stereotyping.

Ingroup Members

Individuals who belong to the same group or category as one perceives oneself, often feeling a sense of solidarity and common identity with them.