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Annie Reallocates Her Budget Until the Ratios of Marginal Utilities

Question 76

Multiple Choice

Annie reallocates her budget until the ratios of marginal utilities of goods equal the ratios of their prices.Which of the following is true of Annie's behavior?


A) She ensures that her expected marginal utilities from goods are equal to zero.
B) She ensures that her marginal utility from each good is less than that good's marginal cost.
C) She maximizes her total utility derived from the consumption of goods.
D) She adjusts her baskets of goods until marginal utilities of all goods become negative.
E) She maximizes her marginal utilities from goods and minimizes her disutility from consumption.

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