Sally is allocating her budget between two goods, A and B. If Sally has used up the budget on a combination of A and B for which MU_A/PA exceeds MU_B/P_B, she can increase total utility by buying A) more A and less B B) more B and less A C) more A without changing her consumption of B D) less B without changing her consumption of A E) more B and more A

Question

Quizplus · Accepted Answer

Sally can increase her total utility by buying more of good A and less of good B because the marginal utility per dollar spent on A is greater than that on B, indicating she gets more utility per dollar from A.

Sally Is Allocating Her Budget Between Two Goods, a and B