If good A has a marginal utility of 30 and a price of $5, and good B has a marginal utility of 10 and a price of $2, then:
A) good A is a better buy than good B.
B) good B is a better buy than good A.
C) goods A and B are of equal value to this consumer.
D) neither good A nor B is worth the money.
E) goods A and B should both be purchased.

Question

Quizplus · Accepted Answer

To determine which good is a better buy, we need to calculate their marginal utility per dollar:

Marginal utility per dollar of good A: 30/5 = 6
Marginal utility per dollar of good B: 10/2 = 5

Therefore, good A provides more marginal utility per dollar than good B, making it the better buy.

If Good a Has a Marginal Utility of 30 and a Price