Assume that a person is consuming the utility-maximizing quantities of pork and chicken.We can conclude that:
A) the price of pork equals the price of chicken.
B) the marginal utility of pork equals the marginal utility of chicken.
C) the ratio of the marginal utility to price is the same for pork and for chicken.
D) both A and B are true.

Question

Quizplus · Accepted Answer

If the person is consuming the utility-maximizing quantities of pork and chicken, then the ratio of the marginal utility to price is equal for both goods. This is because the consumer will continue to allocate their budget until the marginal utility per dollar spent on each good is equal. Therefore, if the marginal utility per dollar spent is equal, then the ratio of marginal utility to price must also be equal, making choice C the correct answer. It is not necessarily true that the price of pork equals the price of chicken (choice A) or that the marginal utility of pork equals the marginal utility of chicken (choice B).

Assume That a Person Is Consuming the Utility-Maximizing Quantities of Pork