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.

Question

Quizplus · Accepted Answer

Total utility is maximized when the consumer allocates their budget such that the marginal utility per dollar spent is equal across all goods, which is represented by the ratio of marginal utility to price being equal for both goods.

Total Utility Is Maximized in the Consumption of Two Goods