If a consumer reallocates his or her spending away from good A and towards good B, then the consumer's total utility will increase if:

Question

Quizplus · Accepted Answer

The consumer's total utility will increase if they spend more on the good with a higher marginal utility per dollar spent (MU/P). Thus, reallocating spending towards good B will increase total utility if MU_B/P_B is greater than MU_A/P_A.

If a Consumer Reallocates His or Her Spending Away from Good