If Ms.Petersen is maximizing her utility in the consumption of goods A and B,which one of the following statements must be true? A)MU_A = MU_B B)MU_A/P_A = MU_B/P_B C)MU_A/PB = MU_B/P_A D)TU_A = TU_B E)TU_A/P_A = TU_B/P_B

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Quizplus · Accepted Answer

This equation represents the condition for utility maximization with respect to the prices of goods A and B. It states that the ratio of the marginal utilities and prices of goods A and B must be equal at the optimal consumption bundle. As Ms. Petersen is maximizing her utility, this condition must hold true.

If MsPetersen Is Maximizing Her Utility in the Consumption of Goods