Suppose you have spent your entire budget and the marginal utilities per dollar spent on all the goods you buy are equal.Which of the following is true?
A)You are not being rational.
B)There is a way to increase your utility by reallocating your purchases.
C)You will reduce your utility if you allocate your income in any other way.
D)You are minimizing your total utility.
E)You have chosen a consumption bundle that lies below your budget line.

Question

Quizplus · Accepted Answer

When the marginal utilities per dollar spent on all goods are equal, you are maximizing your utility given your budget. Any reallocation would decrease your total utility.

Suppose You Have Spent Your Entire Budget and the Marginal