The MU/P equalization principle means consumers will exhaust their expenditure budget so that, in the end, the MU/P ratio is:
A) zero for each good.
B) higher for goods the consumer wants the most.
C) maximized for the goods the consumer wants the most.
D) higher than TU/P.
E) the same for each good.

Question

Quizplus · Accepted Answer

The MU/P equalization principle states that consumers allocate their budget in such a way that the marginal utility per dollar spent (MU/P) is equal across all goods, maximizing total utility.

The MU/P Equalization Principle Means Consumers Will Exhaust Their Expenditure