For any two goods, A and B, if MUA divided by PA equals 2.5 and MUB divided by PB equals 4.0, then with given income and prices the consumer should

Question

Quizplus · Accepted Answer

If MU/P for good A is 2.5 and for good B is 4.0, the consumer should allocate more of their budget towards good B since it provides more satisfaction per dollar spent compared to good A. This means the consumer should buy more of good B and less of good A, which is described in choice B. Therefore, B is the best choice.

For Any Two Goods, a and B, If MUA Divided