Assume that a consumer purchases a combination of product A and product B such that the MU ₐ /P ₐ = 8 and MU ᵦ /P ᵦ = 6. To maximize utility without spending more money, the consumer should
A)purchase less of product A and more of product B.
B)purchase more of product A and less of product B.
C)purchase more of both product A and product B.
D)make no change in purchases of products A and B.

Question

Quizplus · Accepted Answer

To maximize utility, the consumer should equalize the marginal utility per dollar spent across all goods. Since MUₐ/Pₐ (8) is greater than MUᵦ/Pᵦ (6), the consumer should purchase more of product A (where they get more utility per dollar spent) and less of product B to equalize the marginal utility per dollar spent across both products.

Assume That a Consumer Purchases a Combination of Product a and Product