Question

Suppose Paul has chosen a combination of two goods, A and B, such that the marginal utility per dollar spent for good A (MUA/PA) is 0.6 and the marginal utility per dollar spent for good B (MUB/PB) is 1. To increase utility with the same amount of money, Paul should: A. increase the number of both A and B consumed. B. increase the number of B consumed and decrease the number of A consumed C. do nothing; he cannot increase total utility. D. increase the number of A consumed and decrease the number of B consumed.

Answer 1

B. increase the number of B consumed and decrease the number of A consumed

Step-by-step explanation:

To explain this further, we have to understand what marginal utility stands for in this question

Marginal utility quantifies the added satisfaction that a consumer garners from consuming additional units of goods or services. This concept is used by economist to determine how much fo an item consumers are willing to purchase