Kati-Lyn has to choose between eating Chinese food and Indian food. Both Chinese food and Indian food cost the same. Which of the following equations, where MU is marginal utility and U is total utility, will lead to the optimal level of consumption?

Question

Quizplus · Accepted Answer

The optimal level of consumption is achieved when the marginal utility per dollar spent is the same for both options. Since both options cost the same, the equation for marginal utility is not needed. The total utility is also irrelevant in this case as we are not comparing the total satisfaction of both options, but rather the satisfaction per dollar spent. Therefore, the correct equation is MUC = MUI, which can be simplified as MU_Chinese = MU_Indian.

Kati-Lyn Has to Choose Between Eating Chinese Food and Indian