If Dana spends all her income on ice cream and Mountain Dew and her marginal utility per dollar from ice cream is greater than her marginal utility per dollar from Mountain Dew, she should buy more ice cream and less Mountain Dew.

Question

Quizplus · Accepted Answer

To maximize utility, Dana should allocate her spending such that the marginal utility per dollar is equal across all goods. If the marginal utility per dollar from ice cream is greater, she should buy more ice cream and less Mountain Dew until they are equal.

If Dana Spends All Her Income on Ice Cream and Mountain