al Econ mc

Suppose there were a law of increasing marginal personal use value,i.e., the more the consumer had of a good, the higher its marginal personal use valution. The economic theory would predict that the comsumer would

A. refuse to purchase any goods.
B. spend all his income on only one good.
C. allocate his income until the marginal use values of the last dollar spent on each good are equal.
D. buy more than one good and obtain the same total use value from each good purchased (1987 Q.27)

Why the answer is B?






Which of the following is a refutable implication derived from indifference curve analysis?

A. The relative price of two goods is equal to the marginal rate of substitution when utility is maximized.
B. If real income or apparent real income is held constant, a decrease in the price of a good will lead to an increase in its quantity purchased.
C. When the price of a good decreases, its quantity demanded may decrease or increase.
D. The income effect is positive for a normal good and negative for an inferior good.
(2002 Q.5)

Why the answer is B?






http://i226.photobucket.com/albums/dd260/wingreally/eCONMC1001.jpg

Why the answer is B?