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) M U d M U c \mathrm { MU } _ { d } \mathrm { MU } _ { c } MU d MU c

Question

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) M U d < M U c \mathrm { MU } _ { d } < \mathrm { MU } _ { c } MU d < MU c B) M U c P c < M U d P c \frac { \mathrm { MU } _ { c } } { P _ { c } } < \frac { \mathrm { MU } _ { d } } { P _ { c } } P c MU c < P c MU d C) \frac { \mathrm { MU } _ { d } } { P _ { d } }> M U c P c > M U d P d \frac { \mathrm { MU } _ { c } } { P _ { c } } > \frac { \mathrm { MU } _ { d } } { P _ { d } } P c MU c > P d MU d D) \mathrm { MU } _ { c }> M U d > M U c \mathrm { MU } _ { d } > \mathrm { MU } _ { c } MU d > MU c

Brian Arellano · Accepted Answer

Final Answer : C, Explanation :   The consumer will increase his total utility by spending more on C and less on D if the marginal utility per dollar spent is higher for C than for D. This is expressed by the inequality:  \frac{\mathrm{MU}_d}{P_d} > M U c P c > M U d P d  \frac{\mathrm{MU}_c}{P_c}  >  \frac{\mathrm{MU}_d}{P_d}  P c ​ MU c ​ ​ > P d ​ MU d ​ ​ Option C is the only one that satisfies this inequality.

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