Suppose Good A costs $1.00 per unit and Good B costs $2.00 per unit. If each additional unit of Good B adds three times as much to your total satisfaction than is added by each additional unit of Good A, you will increase your total satisfaction from consuming goods A and B by:

Question

Quizplus · Accepted Answer

The principle of marginal utility per dollar spent indicates that consumers maximize satisfaction by equalizing the marginal utility per dollar across all goods. Since Good B provides three times as much satisfaction per unit as Good A but only costs twice as much, consumers increase total satisfaction by consuming less of Good A and more of Good B, adjusting until the marginal utility per dollar spent is equalized across both goods.

Suppose Good a Costs $1