Author Question: As a consumer allocates income between good A and good B, total utility is maximized when a. the ... (Read 100 times)

809779 · **on:** Jul 1, 2018

As a consumer allocates income between good A and good B, total utility is maximized when
a. the marginal utility of A = the marginal utility of B
b. the marginal utility of A = the marginal utility of B = 0
c. the price of A = price of B
d. marginal utility of A/price of A = marginal utility of B/price of B = 0
e. marginal utility of A/price of A = marginal utility of B/price of B

Question 2

When a consumer spends income so that the ratio of marginal utilities (MUs) of all goods purchased equals the ratio of their prices, the consumer is
a. maximizing marginal utility
b. spending too much on all goods
c. maximizing total utility
d. beyond the point of diminishing marginal utility
e. behaving in opposition to the principal of rational behavior