John consumes only books (good on X axis) and DVDS (good on Y axis). At his current consumption bundle, his marginal utility from DVDS is 20 and from books is 40. Each DVD costs £20, and each book costs £10. Let MUB be the marginal utility of books, MUp be the marginal utility from DVDS, PB be the price of books, and Pp be the price of DVDS. Which of the following statements is true? John is: A Not maximizing his utility because MUB/PB < MUD/PD. В Maximizing his utility because MUB/MUD # PB/PD. C Maximizing his utility because MUB/MUD = PB/PD. D Not maximizing his utility because MUB/PB>MUD/PD.

Micro Economics For Today
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Author:Tucker, Irvin B.
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Chapter6: Consumer Choice Theory
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John consumes only books (good on X axis) and DVDS (good on Y axis).
At his current consumption bundle, his marginal utility from DVDS
is 20 and from books is 40. Each DVD costs £20, and each book costs £10.
Let MUB be the marginal utility of books, MUD be the marginal utility
from DVDS, PB be the price of books, and Pp be the price of DVDS. Which
of the following statements is true? John is:
A
Not maximizing his utility because MUB/PB < MUD/PD.
Maximizing his utility because MUB/MUD # PB/PD.
C
Maximizing his utility because MUB/MUD = PB/PD.
D
Not maximizing his utility because MUB/PB>MUD/PD.
Transcribed Image Text:John consumes only books (good on X axis) and DVDS (good on Y axis). At his current consumption bundle, his marginal utility from DVDS is 20 and from books is 40. Each DVD costs £20, and each book costs £10. Let MUB be the marginal utility of books, MUD be the marginal utility from DVDS, PB be the price of books, and Pp be the price of DVDS. Which of the following statements is true? John is: A Not maximizing his utility because MUB/PB < MUD/PD. Maximizing his utility because MUB/MUD # PB/PD. C Maximizing his utility because MUB/MUD = PB/PD. D Not maximizing his utility because MUB/PB>MUD/PD.
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