The price of chicken = $5, while the price of pork = $9. If, after spending her entire budget, the consumer has MU of chicken = 6, while the MU of pork = 12, then the consumer should have bought more chicken and less pork in order to increase her total utility.

Question

Quizplus · Accepted Answer

The consumer is maximizing utility when the marginal utility per dollar spent is equal for all goods. Here, MU of chicken per dollar is 6/5 and MU of pork per dollar is 12/9. Since these ratios are equal (both simplify to 1.2), the consumer has already maximized total utility given her budget.

The Price of Chicken = $5, While the Price of Pork