The price of good "a" is $5 and the price of good "b" is $15. If the marginal utility of good "a" is 20 then the marginal utility of good "b" must be ________ to have an optimum combination of goods purchased.
A) 4
B) 20
C) 60
D) 80

Question

Quizplus · Accepted Answer

To achieve an optimum combination of goods, the ratio of marginal utility to price should be equal for both goods. For good "a", MU/Price = 20/5 = 4. Therefore, for good "b", MU/Price should also be 4. Solving for MU of good "b": MU/15 = 4, MU = 60.

The Price of Good "A" Is $5 and the Price