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A Consumer Spends All of Her Income on Goods X

Question 194

Multiple Choice

A consumer spends all of her income on goods x and y. At her optimum,


A) her valuation of the two goods exceeds the market's valuation of the two goods.
B) her marginal rate of substitution between good x and good y exceeds the ratio of the price of good x to the price of good y.
C) the slope of her budget constraint is equal to the slope of the highest indifference curve that she can reach while remaining within her budget.
D) her expenditure on good x is equal to her expenditure on good y.

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