Jessica spends all her income on two goods, a and b. the price of a is $5, and the price of b is $7. at the current consumption bundle, the marginal utility of a is 10, and the marginal utility of b is 21. to maximize utility given her income, jessica should:

Jessica should consume more of good A.

Explanation:

Jessica spends all her income on two goods, A and B.

The price of A is $5, and the price of B is $7.

At the current consumption bundle, the marginal utility of A is 10, and the marginal utility of B is 21.

The total utility is maximized when the ratio of marginal utility and price of the goods consumed is equal for all the goods in the bundle.

The ratio for Good A

=

= 2

The ratio for good B

=

= 3

Since the ratio is higher for good B, the consumer should shift from consumption of good B to good A until the ratio is equal for both the goods.

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