Assume MU c and MU d represent the marginal utility that a consumer gets from products C and D, the respective prices of which are P_c and P_d. The consumer will increase his total utility from a specific money outlay by spending more on C and less on D if initially

A) MU d<MU c.
B) MU cP c<MU dP c.
C) MU cP c>MU dP d.
D) MU d>MU c.

Question

Holly James · Accepted Answer

Final Answer : C, Explanation :   The consumer will increase his total utility from a specific money outlay by spending more on product C and less on product D if the marginal utility per dollar spent on C is greater than the marginal utility per dollar spent on D, which is represented by    \frac{MU_d}{P_d} > M U c P c > M U d P d  \frac{MU_c}{P_c}  >  \frac{MU_d}{P_d}  P c ​ M U c ​ ​ > P d ​ M U d ​ ​  .

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