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Suppose Larry has to choose between purchasing high-definition televisions and milk. Which of the following is the utility-maximizing rule that Larry should follow while choosing
Suppose Larry has to choose between purchasing high-definition televisions and milk. Which of the following is the utility-maximizing rule that Larry should follow while choosing the optimal quantities of these two goods? (Note: In the answer options that follow, MU stands for "marginal utility.") O MU of Milk MU of HDTVs Price of Milk Price of HDTVs O MU of Milk MU of HDTVs Price of HDTVs Price of Milk OMU of Milk = MU of HDTVs (MU of Milk) x (Price of Milk) = (MU of HDTVs) x (Price of HDTVs) Since milk costs little and high-definition televisions are expensive, it must follow that when people choose their optimal quantities of milk and high- definition televisions to purchase, the marginal utility they receive from the last gallon of milk they buy is than the marginal utility they receive from the last high-definition television they buy. Grade It Now
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