If Sally maximizes her total utility by allocating time between two different activities,she will select the combination at which the marginal utility per hour spent is the same in both activities.

Question

Quizplus · Accepted Answer

This is known as the principle of equal marginal utility per dollar. When a consumer allocates time or money between two different activities, they will achieve maximum total utility when the marginal utility per hour spent is the same in both activities.

If Sally Maximizes Her Total Utility by Allocating Time Between