If a consumer must spend her entire income on some combination of two commodities and chooses to spend it all on just one of the commodities then:
A) the other commodity is an economic bad.
B) the other commodity must have zero marginal utility.
C) the other commodity generates less utility per dollar spent on the good.
D) the two commodities must be perfect substitutes.

Question

Quizplus · Accepted Answer

The consumer's decision to spend all income on one commodity suggests that this commodity generates more utility per dollar than the other, indicating a higher marginal utility per dollar spent compared to the alternative. This is a fundamental principle of consumer choice theory, where individuals allocate their budget to maximize total utility.

If a Consumer Must Spend Her Entire Income on Some