Jane is attempting to maximize utility by selecting a market basket of goods. For each of the goods in the market basket the marginal utility per dollar spent is equal. There are some goods which are affordable but do not appear in the Jane's market basket. If Jane has maximized utility, the marginal utility per dollar spent on each of the goods that does not appear in the market basket is:
A) too high.
B) too low.
C) zero.
D) infinite.
E) none of the above

Question

Quizplus · Accepted Answer

If Jane has maximized her utility with a selection of goods where the marginal utility per dollar spent is equal across all chosen goods, any good not in her basket must offer lower marginal utility per dollar spent. This is because if these unchosen goods offered higher or equal marginal utility per dollar, Jane would have included them in her basket to increase or maintain her utility.

Jane Is Attempting to Maximize Utility by Selecting a Market