-Refer to the above table. If a consumer's optimum consists of 3 magazines and 6 novels, then
A) the price of a magazine is six times more than the price of a novel.
B) the price of a magazine is three times more than the price of a novel.
C) the price of a novel is more than five times more than the price of a magazine.
D) the price of a novel is six times more than the price of a magazine.

Question

-Refer to the above table. If a consumer's optimum consists of 3 magazines and 6 novels, then
A) the price of a magazine is six times more than the price of a novel. 
B) the price of a magazine is three times more than the price of a novel. 
C) the price of a novel is more than five times more than the price of a magazine. 
D) the price of a novel is six times more than the price of a magazine.

Quizplus · Accepted Answer

The price ratio of goods at the consumer's optimum is equal to the ratio of the quantities consumed. If a consumer chooses 3 magazines and 6 novels, it implies that the marginal utility per dollar spent on each is equal. Therefore, if the consumer buys twice as many novels as magazines, it suggests that the price of a magazine is higher relative to a novel, specifically six times more, to make the consumer indifferent between purchasing one over the other at the margin.

-Refer to the Above Table