Suppose that a consumer is currently at an optimum when consuming goods A and B. Which of the following must be TRUE?
A) The total utility from A is equal to the total utility from B.
B) The price of A is equal to the price of B.
C) The marginal utility of A is equal to the marginal utility of B.
D) The marginal utility to price ratio of A is equal to the marginal utility to price ratio of B.

Question

Quizplus · Accepted Answer

At a consumer's optimum, the marginal utility per dollar spent on each good must be equal. This ensures that the consumer is maximizing their utility given their budget constraint. This is represented by the condition that the marginal utility to price ratio of A is equal to the marginal utility to price ratio of B.

Suppose That a Consumer Is Currently at an Optimum When