Practice question · Multiple choice
At the consumer's optimum, . What does this say?
Hints
- The ratios equalise bang-for-buck.
- If one good gave more utility per euro, you'd buy more of it.
Show the answer
C. Marginal utility per euro is equalised
Why
Equalised bang-for-buck: if , shifting a euro from to raises utility, the optimum is where no reallocation helps.
Practise Lagrange Multipliers
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