Question

Refer to the figure below. If the price of Good A is $2 and the price of Good B is $6, then the rational spending rule is satisfies when the consumer purchases ______ units of Good A and ______ units of Good B.

Units Marginal Utility Marginal Utility of Good A 30 27 15 8 of Good B 40 24 14

Select one:

a. 1; 1

b. 2; 1

c. 4; 3

d. 3; 2

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Answer #1

Answer is C. 4,3

Because it satisfies the rational spending rule and correlates to substitution and income effects .

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