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Alice Has Spent All of Her Income on Ten Different

Question 81

Multiple Choice

Alice has spent all of her income on ten different goods,and knows that the marginal utilities per dollar spent on the ten goods are equal.Which of the following statements is correct?


A) She could possibly increase her total utility by redistributing her income among the ten items.
B) She has violated the assumption of rationality.
C) The law of diminishing marginal utility does not apply to her.
D) Any reallocation of income among the ten items will reduce her total utility.
E) She must be at a point inside of her budget line.

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