If Santiago thinks the last dollar spent on jeans yields less satisfaction than the last dollar spent on shoes, and Santiago is a utility-maximizing consumer, he should
A) decrease his spending on shoes.
B) decrease his spending on shoes and increase his spending on jeans.
C) increase his spending on jeans.
D) increase his spending on shoes and decrease his spending on jeans.

Question

Quizplus · Accepted Answer

Santiago should increase spending on shoes and decrease spending on jeans to equalize the marginal utility per dollar spent, maximizing his total utility.

If Santiago Thinks the Last Dollar Spent on Jeans Yields