To reach the consumer optimum for two goods,the
A) ratio of marginal utility to price for both goods must be equal.
B) marginal utility for both goods must be equal.
C) total utility for both goods must be equal.
D) ratio of total utility to price for both goods must be equal.
E) price of both goods must be equal.

Question

Quizplus · Accepted Answer

The consumer optimum is achieved when the ratios of marginal utility to price for both goods are equal. This means that the consumer is allocating their budget in a way that the $1 spent on each good provides the same level of marginal utility. Any other allocation would either result in a decrease in total utility or a reduction in spending power. Therefore, choice A is the best answer.

To Reach the Consumer Optimum for Two Goods,the