If a consumer purchases a combination of commodities a and b such that MU_a/P_a = 40 and MU_b/P_b = 60, to maximize utility, the consumer should buy: A) less of both a and b. B) less of a and more of b. C) more of both a and b. D) more of a and less of b.

Question

Quizplus · Accepted Answer

The ratio of the MUs to the prices of the two commodities is not equal. In fact, it is greater for commodity b, suggesting that the consumer should buy more of commodity b to maximize their utility. Therefore, the consumer should buy less of commodity a and more of commodity b, leading to Choice B as the best option.

If a Consumer Purchases a Combination of Commodities a and B