A condition for consumer utility maximization is
-
equality of the ratio of marginal utilities and the ratio of prices
- equality of the ratio of average utilities and the ratio of prices
- equality of the marginal utility to total utility ratio for both commodities
- total utility and marginal utility must be zero
The correct answer is: A
Explanation
In Utility Maximization, the consumers decide to spend their money so that the amount spent on each product purchased yields the same amount of extra marginal utility. The consumer would maximize its utility when marginal utility equals the price paid for the commodities.