How Is Total Utility Maximised in the Consumption of Two

question 25

Multiple Choice

How is total utility maximised in the consumption of two goods?

• A)By equating the marginal utility for each good consumed.
• B)By equating the marginal utility per dollar for each good consumed.
• C)By equating the total utility of each good divided by its price.
• D)By maximising expenditure on each good.

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Definitions:

Principal

An amount of money that is loaned or invested, excluding any interest or profit earned on it.

Collateral

An asset that a borrower offers to a lender as security for a loan, which can be seized if the loan is not repaid according to the agreement.

Accounts Payable

The amount a company owes to suppliers for goods and services purchased with credit.