Suppose the Price of a Is $20, the Price of B

question 19

Multiple Choice

Suppose the price of A is $20, the price of B is $10, and that the consumer is currently spending all available income. At the consumer's current consumption basket the marginal utility of A is 6 and the marginal utility of B is 4.

• A) The consumer is currently maximizing utility.
• B) The consumer could increase utility by consuming more of good A and less of good B .
• C) The consumer could increase utility by consuming more of good B and less of good A .
• D) Nothing can be said about the consumer's utility because we do not know the consumer's income or utility function.

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