Assume that the ratio of the marginal utility of bread to the marginal utility of butter is 2,and that the price of bread is equal to the price of butter.Brad can increase his welfare by consuming

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The ratio of the marginal utility of bread to the marginal utility of butter is 2, which means that Brad values bread twice as much as he values butter. Since the prices of both goods are equal, Brad should allocate his budget in a way that the marginal utility per dollar spent is equal for both goods. Suppose Brad currently consumes equal amounts of bread and butter. If he wants to increase his welfare, he should consume more of the good that provides him with higher marginal utility per dollar spent, which in this case is bread. However, he needs to also consider the law of diminishing marginal utility, which states that as a person consumes more of a particular good, the marginal utility derived from each additional unit of that good will eventually decline. Therefore, he should consume less of the good that provides him with lower marginal utility per dollar spent, which in this case is butter. Ultimately, Brad should increase his consumption of bread and decrease his consumption of butter to maximize his welfare.

Assume That the Ratio of the Marginal Utility of Bread