Question

Total utility is maximized in the consumption of two goods by

A. equating the marginal utility for each good consumed.
B. equating the marginal utility per dollar for each good consumed.
C. equating the total utility of each good divided by its price.
D. maximizing expenditure on each good.

Answer 1

Hi there

The correct answer is : B

I hope that's help:)

Answer 2

Marginal utility from a good is the change in total utility that results from a unit increase in the quantity of the good consumed. to maximize utility, we can use the process of B.equating the marginal utility per dollar for each good consumed. This is also obtained by trying different combinations and trying out which one is the best