Assertion (A): If MUₓ ÷ Pₓ = MUᵧ ÷ Pᵧ but some income is left unspent, the consumer is in equilibrium.
Reason (R): Equilibrium also requires the whole income to be spent.

Both A and R are true, and R is the correct explanation of A.Correct answerYour answerBoth A and R are true, but R is not the correct explanation of A.Correct answerYour answerA is true, but R is false.Correct answerYour answerA is false, but R is true.Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer D

Correct answer: D

A is false: with income left, buying more of both raises satisfaction.
R is true and is the condition A ignores.

Concept: The budget condition
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsEquilibrium with two goods

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Ten questions from Utility & Consumer's Equilibrium, at your own pace.

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Ten questions from Utility & Consumer's Equilibrium, at your own pace.

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Assertion (A): If MUₓ ÷ Pₓ = MUᵧ ÷ Pᵧ but some income is left unspent, the consumer is in equilibrium.Reason (R): Equilibrium also requires the whole income to be spent.

Explanation

Assertion (A): If MUₓ ÷ Pₓ = MUᵧ ÷ Pᵧ but some income is left unspent, the consumer is in equilibrium.
Reason (R): Equilibrium also requires the whole income to be spent.