-Refer to the table above.If the price of Good A is $1 and the price of Good B is $3,then the rational spending rule predicts that _____ units of Good A and ______ units of Good B will be purchased.

Question

Quizplus · Accepted Answer

The rational spending rule states that consumers should allocate their income so that the marginal utility per dollar spent on each good is equal. In this case, the marginal utility per dollar spent on Good A is 4, and the marginal utility per dollar spent on Good B is 3. Therefore, consumers should spend more on Good A than on Good B. The correct answer is A) 4;3.

-Refer to the Table Above