If the prices of two goods are equal then, for a utility maximizer:
A)the demand curves for the two goods are identical.
B)the quantity consumed of the two goods is equal.
C)the marginal values of the two goods are equal.
D)the total values of the two goods are equal.

Question

Quizplus · Accepted Answer

If the prices of two goods are equal, a utility maximizer will choose to consume equal amounts of both goods until the marginal values of the two goods are equal. This is because consuming more of one good and less of the other would lead to a decrease in the marginal value of the former and an increase in the marginal value of the latter, creating a differential in the marginal values of the two goods. Therefore, choice C is correct.

If the Prices of Two Goods Are Equal Then, for a Utility