Total utility is maximized in the consumption of two goods by equating the: a. prices of both...
Question:
Total utility is maximized in the consumption of two goods by equating the:
a. prices of both goods for the last dollar spent on each good.
b. marginal utilities of both goods for the last dollar spent on each good.
c. ratios of marginal utility to the price of both goods for the last dollar spent on each good.
d. marginal utility of one good to the price of the other good.
Total Utility
Total utility maximization is the target of consumer behavior and utility analysis. The utility is derived after consuming all the goods and all the units. The total utility is maximized with the slope of the budget line to be equal to the slope of the indifference utility curve.
Answer and Explanation: 1
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The correct answer is c. Ratios of marginal utility to the price of both goods for the last dollar spent on each good.
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What is Marginal Utility? - Definition, Theory, Formula & Example
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Learn about marginal utility and how it is calculated. Explore the basics of marginal utility, the marginal utility equation, and how it is applicable in economics.
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