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6 March, 06:52

Assume a consumer can buy two goods, A and B, and that the prices are Pa and Pb respectively. The marginal utility of A is MUa and that of B is MUb. Which of the following expressions represents consumers' optimum utility maximization?

a. MU=MUbb. MUa * PA=MUb * Pbc. Pa/Pb=MUa/MUbd. PA * PB=MUa * Mube. MUa/MUb

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  1. 6 March, 07:10
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    (c) MUa/Pa = MUb/Pb

    Explanation:

    The Utility Maximization Rule is

    MUa/Pa = MUb/Pb, where MUa represents the marginal utility derived from good a, Pa represents the price of good a, MUb represents the marginal utility of good b and Pb represents the price of good b.
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