Chapter 51, Problem 3MCQ

To determine

The optimal consumption rule.

Explanation of Solution

The optimal consumption rule states that total utility is maximized when all income is spent and MU/P is equal for all goods because when a consumer maximizes his/her utility then the marginal utility per dollar spent would remain same for all goods.

Therefore, the correct option is a.

Economics Concept Introduction

Introduction:

Marginal utility refers to the benefit or satisfaction of person by consuming one additional unit of the good.