If a consumer purchases a combination of commodities a and b such that MUₐ/Pₐ = 50 and MUb/Pb = 40, to maximize utility, the consumer should buy:
A) less of both a and b.
B) more of both a and b.
C) more of a and less of b.
D) less of a and more of b.

Question

Quizplus · Accepted Answer

The consumer should purchase more of the commodity that provides the higher marginal utility per unit of money spent (MU/P). In this case, commodity a provides a higher MU/P ratio of 50, while commodity b provides a lower MU/P ratio of 40. Therefore, the consumer should purchase more of commodity a and less of commodity b to maximize utility.

If a Consumer Purchases a Combination of Commodities a and B