If John consumes only two goods,A and B,and he is maximizing his utility subject to his budget constraint, A)MU_A/MU_B is at a maximum. B)MU_A/MU_B equals the ratio of the total utility of A to the total utility of B. C)MU_A/MU_B equals 1. D)MU_A/MU_Bequals zero. E)MU_A/MU_B equals the ratio of the price of A to the price of B.

Question

Quizplus · Accepted Answer

When John is maximizing his utility subject to his budget constraint, the marginal rate of substitution (MU_A/MU_B) equals the ratio of the prices of the two goods (Price_A/Price_B).

If John Consumes Only Two Goods,A and B,and He Is