For the Two Good Case,the Rational Spending Rule Requires That

question 58

Multiple Choice

For the two good case,the rational spending rule requires that

• A)total expenditures on the two goods be equal.
• B)total utility from the two good be equal.
• C)average utility from the two goods be equal.
• D)the ratio of marginal utility to price be equal for the two goods.

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Definitions:

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance.

Economic Profits

Profits exceeding the total opportunity costs of a business, indicating it is outperforming its next best alternative.

Forgone Entrepreneurial Income

The potential income an entrepreneur misses out on when choosing to start their own business rather than working for wages.

Production Costs

Expenses related to the manufacture of goods or delivery of services, including materials, labor, and overhead.