Question

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.

Answer 1

The correct answer is (C)

Explanation: Utility is the satisfaction derived out of a product. Combinations of two goods within the consumer's income or budget line can only be used which are attainable. It depends on individual to choose any combination out of several. Here in this case consumer is spending only on one commodity that means other good is comparatively low which means utility generated out of other good is less.