Fred spends all of his income on two goods: DVDs and downloaded music. If Fred's marginal utility per dollar from DVDs is greater than his marginal utility per dollar from downloaded music, Fred can ________ his total utility by buying ________.

Question

Quizplus · Accepted Answer

Fred can increase his total utility by purchasing more of the good that provides higher marginal utility per dollar, which in this case is DVDs, and less of the good that provides lower marginal utility per dollar, which is downloaded music.

Fred Spends All of His Income on Two Goods: DVDs