If a consumer maximizes her preferences subject to her budget by choosing a consumption bundle where the ratio of her marginal utilities of shelter and food, , is greater than the ratio of the prices of shelter and food, , then she must
A) be consuming food but no shelter.
B) be consuming shelter but no food.
C) believe that shelter is a "bad."
D) be consuming both food and shelter.
E) not be spending all of her income.

Question

If a consumer maximizes her preferences subject to her budget by choosing a consumption bundle where the ratio of her marginal utilities of shelter and food,  , is greater than the ratio of the prices of shelter and food,  , then she must
A) be consuming food but no shelter. 
B) be consuming shelter but no food. 
C) believe that shelter is a "bad." 
D) be consuming both food and shelter. 
E) not be spending all of her income.

Quizplus · Accepted Answer

The Answer of If a consumer maximizes her preferences subject to her budget by choosing a consumption bundle where the ratio of her marginal utilities of shelter and food,  , is greater than the ratio of the prices of shelter and food,  , then she must
A) be consuming food but no shelter. 
B) be consuming shelter but no food. 
C) believe that shelter is a "bad." 
D) be consuming both food and shelter. 
E) not be spending all of her income.

If a Consumer Maximizes Her Preferences Subject to Her Budget