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Suppose You Spent Your Entire Budget on Goods So That

Question 132

Multiple Choice

Suppose you spent your entire budget on goods so that the marginal utility per dollar spent on each is identical. Which of the following is true?


A) Your purchases are not efficient because there is no reason why you should buy the
Same quantity of each.
B) You can increase your total utility by shifting income from low marginal utility
Generating goods to higher marginal utility generating ones.
C) You will reduce your total utility if you allocate income in any other way.
D) You are minimizing your marginal utility this way, which is what you want.
E) You can avoid diminishing marginal utility.

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