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

Quizplus · Accepted Answer

When the marginal utilities per dollar spent are identical for all goods, it means you have achieved the optimal allocation of your budget, maximizing your total utility. Any reallocation would reduce your utility.

Suppose You Have Spent Your Entire Budget And, for All