The utility-maximizing condition is achieved by equating the ratio of marginal utility to price for all goods.

Question

Quizplus · Accepted Answer

This statement is true. The ratio of marginal utility to price represents the additional satisfaction gained per unit of currency spent on the good, and utility is maximized when this ratio is the same for all goods consumed. This is known as the principle of equal marginal utility per dollar spent.

The Utility-Maximizing Condition Is Achieved by Equating the Ratio of Marginal