Refer to the figure below. If the price of Good A is $1 and the price of Good B is $3, then the rational spending rule is satisfied when the consumer purchases ______ units of Good A and ______ units of Good B. $$\begin{array} { | c | c | c | }
\hline \text { Units } & \begin{array} { c }
\text { Marginal Utility } \
\text { of Good A }
\end{array} & \begin{array} { c }
\text { Marginal Utility } \
\text { of Good B }
\end{array} \
\hline 1 & 30 & 40 \
\hline 2 & 27 & 33 \
\hline 3 & 15 & 24 \
\hline 4 & 8 & 14 \
\hline
\end{array}$$
A)4; 3
B)3; 4
C)4; 4
D)3; 3

Question

Refer to the figure below. If the price of Good A is $1 and the price of Good B is $3, then the rational spending rule is satisfied when the consumer purchases ______ units of Good A and ______ units of Good B. $$\begin{array} { | c | c | c | } 
\hline \text { Units } & \begin{array} { c } 
\text { Marginal Utility } \
\text { of Good A }
\end{array} & \begin{array} { c } 
\text { Marginal Utility } \
\text { of Good B }
\end{array} \
\hline 1 & 30 & 40 \
\hline 2 & 27 & 33 \
\hline 3 & 15 & 24 \
\hline 4 & 8 & 14 \
\hline
\end{array}$$
A)4; 3
B)3; 4
C)4; 4
D)3; 3

Quizplus · Accepted Answer

The rational spending rule states that the consumer should allocate their budget 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 30/1 = 30, and the marginal utility per dollar spent on Good B is 40/3 = 13.33. Therefore, the consumer should purchase 4 units of Good A and 3 units of Good B.

Refer to the Figure Below A)4; 3 B)3; 4 C)4; 4 D)3; 3

Refer to the Figure Below A)4; 3
B)3; 4
C)4; 4
D)3; 3