Refer to the figure below. If the price of a t-shirt is $6 and the price of a sweater is $80, then the rational spending rule is satisfied when the consumer purchases _____ t-shirts and ______ sweaters. $$\begin{array} { | c | c | c | }
\hline \text { Units } & \begin{array} { c }
\text { Utils Per Year } \
\text { from T-shirts }
\end{array} & \begin{array} { c }
\text { Utils Per Year } \
\text { from Sweaters }
\end{array} \
\hline 0 & 0 & 0 \
\hline 1 & 75 & 400 \
\hline 2 & 135 & 720 \
\hline 3 & 180 & 960 \
\hline 4 & 210 & 1120 \
\hline
\end{array}$$
A)4; 3
B)3; 4
C)4; 4
D)4; 1

Question

Refer to the figure below. If the price of a t-shirt is $6 and the price of a sweater is $80, then the rational spending rule is satisfied when the consumer purchases _____ t-shirts and ______ sweaters. $$\begin{array} { | c | c | c | } 
\hline \text { Units } & \begin{array} { c } 
\text { Utils Per Year } \
\text { from T-shirts }
\end{array} & \begin{array} { c } 
\text { Utils Per Year } \
\text { from Sweaters }
\end{array} \
\hline 0 & 0 & 0 \
\hline 1 & 75 & 400 \
\hline 2 & 135 & 720 \
\hline 3 & 180 & 960 \
\hline 4 & 210 & 1120 \
\hline
\end{array}$$
A)4; 3
B)3; 4
C)4; 4
D)4; 1

Quizplus · Accepted Answer

The rational spending rule is satisfied when the marginal utility per dollar spent is equal for both goods. For t-shirts: MU per dollar = (210-180)/6 = 5. For sweaters: MU per dollar = (400-0)/80 = 5. Therefore, 4 t-shirts and 1 sweater satisfy the rule.

Refer to the Figure Below A)4; 3 B)3; 4 C)4; 4 D)4; 1

Refer to the Figure Below A)4; 3
B)3; 4
C)4; 4
D)4; 1