Purchasing goods such that the ratio of marginal utility to price is equal across all goods results in the:
A)greatest total utility.
B)lowest expenditure.
C)greatest marginal utility.
D)same expenditure on all goods.

Question

Quizplus · Accepted Answer

The utility-maximizing consumption bundle must satisfy the rational spending rule. That is, the ratio of marginal utility to price (which is the marginal utility per dollar)should be the same for all goods.

Purchasing Goods Such That the Ratio of Marginal Utility to Price