Purchasing goods such that the ratio of marginal utility to price is equal across all goods results in the
A)greatest total utility.
B)lowest expenditure on goods.
C)greatest marginal utility for the lower.
D)expenditures for all goods being the same.

Question

Quizplus · Accepted Answer

When the ratio of marginal utility to price is equal across all goods, it means that the consumer is obtaining the same level of satisfaction per dollar spent on each good. This results in the greatest total utility, as the consumer is maximizing their satisfaction subject to their budget constraint. Therefore, option A is the best choice. Options B, C, and D are incorrect.

Purchasing Goods Such That the Ratio of Marginal Utility to Price