If total utility can be increased by purchasing a little more milk and a little less ice cream,the _____
A)marginal utility of milk is greater than that of ice cream.
B)marginal utility of ice cream is greater than that of milk.
C)ratio of the marginal utility of milk to its price is greater than that of ice cream.
D)ratio of the marginal utility of milk to its price is lesser than that of ice cream.
E)marginal utility of ice cream is negative.

Question

Quizplus · Accepted Answer

The correct answer is C because it reflects the principle of equi-marginal utility, which suggests that consumers maximize total utility when the ratio of the marginal utility of a good to its price is equal across all goods. If buying more milk and less ice cream increases total utility, it implies that the marginal utility per dollar spent on milk is higher than that for ice cream.

If Total Utility Can Be Increased by Purchasing a Little