Assume that diminishing marginal utility applies to both dish soap and floor wax and that Minh is spending all of her income.If Minh purchases a combination of dish soap and floor wax such that MU_Dish _soap/ /P_Dish _soap = 50 and MU_Floor _wax/ /P_Floor _wax = 30,to maximize utility,Minh should buy _____ soap and _____ floor wax. A)less;less B)more;more C)more;less D)less;more

Question

Quizplus · Accepted Answer

The formula MUS/PS represents the marginal utility per dollar spent on each product. Since Minh is spending all of her income, she wants to allocate her spending in a way that maximizes her total utility.

Given that the MUS/PS for dish soap is higher (50) than for floor wax (30), Minh should buy more dish soap and less floor wax. This will allow her to get the most marginal utility per dollar spent and maximize her total utility. Therefore, the answer is choice C, "more soap and less floor wax."

Assume That Diminishing Marginal Utility Applies to Both Dish Soap