Economics · Consumer Behaviour
Ajay is a consumer who buys apples and bananas. To maximize his total utility given a fixed budget, how should he allocate his consumption based on the law of equi-marginal utility?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1He maximizes his utility by spending all his income exclusively on one favorite fruit.
- 2He maximizes his utility by consuming a fixed quantity, ensuring more bananas are eaten than apples.
- 3He maximizes his utility by consuming only apples, assuming they always provide higher total utility.
- 4He maximizes his utility when the marginal utility per rupee spent is equalized for both goods.✓
Correct answer
He maximizes his utility when the marginal utility per rupee spent is equalized for both goods.
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