According to the general utility formula,the marginal utility of a good divided by the price of that good is _______.

A) less that negative one
B) equal to one
C) greater than one
D) equal to zero

Question

According to the general utility formula,the marginal utility of a good divided by the price of that good is _______.A) less that negative oneB) equal to oneC) greater than oneD) equal to zero

Shawn Schulgen · Accepted Answer

Final Answer : B, Explanation :  The general utility formula suggests that for an optimal allocation of resources, the marginal utility per dollar spent on each good should be equal across all goods, which implies that the marginal utility of a good divided by the price of that good is equal to one. This ensures that the last dollar spent on each good provides the same amount of satisfaction, maximizing total utility.

According to the general utility formula,the marginal utility of a good divided by the price of that good is _______.

A) less that negative one
B) equal to one
C) greater than one
D) equal to zero

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