Consuming goods until the ratio of marginal utilities of the goods is equal to the ratio of their prices is consistent with maximizing total utility.

Question

Quizplus · Accepted Answer

This statement is consistent with the marginal utility theory of consumption, which states that consumers will maximize their utility by consuming goods until the ratio of the marginal utility of each good to its price is equal across all goods. This is known as the "equimarginal principle." By following this principle, consumers are able to allocate their limited income most efficiently to achieve the highest total utility. Therefore, the statement is true.

Consuming Goods Until the Ratio of Marginal Utilities of the Goods