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:

Experimental Method

is a research methodology where the researcher manipulates one variable and controls/randomizes the rest of the variables to study cause-and-effect relationships.

Cognitive Psychologist

A professional who studies mental processes including how people think, perceive, remember, and learn, often focusing on areas such as problem-solving, decision-making, and memory.

Cognitive Processes

The mental activities involved in acquiring, storing, and manipulating knowledge, such as perception, memory, and thinking.

Between-Subjects Design

A research design in which different groups of participants are exposed to different conditions or treatments.