Assume that a consumer purchases a combination of products. Product A is an old and reliable product. Product B is a new and appealing product. The MU ₐ /P ₐ = 40 and MU ᵦ /P ᵦ = 45. To maximize utility without spending more money, the consumer should
A)purchase less of A and more of B.
B)purchase more of B and less of A.
C)purchase more of both A and B.
D)make no change in A and B.

Question

Quizplus · Accepted Answer

The consumer should purchase more of B and less of A because the marginal utility per dollar spent on B is greater than the marginal utility per dollar spent on A.

Assume That a Consumer Purchases a Combination of Products