Author Question: Suppose you have spent your entire budget and, for all the goods you purchase, the marginal ... (Read 78 times)

stephzh · **on:** Jul 1, 2018

Suppose you have spent your entire budget and, for all the goods you purchase, the marginal utilities per dollar spent are identical. Which of the following is true?
a. You are being irrational.
b. You can increase your utility by reallocating your income.
c. You will reduce your utility if you allocate income in any other way.
d. You are minimizing your marginal utility.
e. You can avoid diminishing marginal utility.

Question 2

The law of diminishing marginal utility may be illustrated by a person
a. buying additional goods after getting a pay raise
b. eating more twinkies but enjoying them less
c. giving some of income to a needy person
d. who spends more hours studying than do his fellow students
e. buying goods so long as their marginal utility is greater than zero