Asked by
Johnnie Young
on Oct 25, 2024
Verified
If a consumer must spend her entire income on some combination of two commodities and chooses to spend it all on just one of the commodities then:
A) the other commodity is an economic bad.
B) the other commodity must have zero marginal utility.
C) the other commodity generates less utility per dollar spent on the good.
D) the two commodities must be perfect substitutes.
Economic Bad
Any item or service that results in a negative effect on the consumer's utility or well-being, opposite of an economic good.
Marginal Utility
The additional satisfaction or benefit received from consuming one more unit of a good or service.
Perfect Substitutes
Items or services that can replace each other without any decrease in value or enjoyment for the user.
- Comprehend the principles of consumer behavior and the decision-making process as it relates to maximizing utility.
- Understand the impact of perfect substitutes and complements on consumer equilibrium.
Verified Answer
VP
Learning Objectives
- Comprehend the principles of consumer behavior and the decision-making process as it relates to maximizing utility.
- Understand the impact of perfect substitutes and complements on consumer equilibrium.