Questions: If the marginal utility per the price of Good A is 2.40, and the marginal utility per the price for Good B is 2.50, what does the utility-maximizing rule tell you to do, if the budget allows it? Purchase 1 more unit of Good A and compare again. Purchase 1 more unit of Good A and stop. Purchase 1 more unit of Good B and compare again. Purchase 1 more unit of Good B and stop.

The utility-maximizing rule, also known as the equimarginal principle, states that consumers maximize their utility when the marginal utility per dollar spent is equal across all goods. In this scenario, the marginal utility per price for Good A is $2.40, and for Good B, it is $2.50.

To maximize utility, you should allocate more of your budget to the good with the higher marginal utility per dollar until the marginal utilities per dollar are equalized.

Therefore, the answer is:

Purchase 1 more unit of Good B and compare again.

Explanation for each option:

1. Purchase 1 more unit of Good A and compare again.

   • Incorrect. Since the marginal utility per dollar for Good A ($2.40) is less than that for Good B ($2.50), purchasing more of Good A would not maximize utility.

2. Purchase 1 more unit of Good A and stop.

   • Incorrect. For the same reason as above, purchasing more of Good A is not optimal.

3. Purchase 1 more unit of Good B and compare again.

   • Correct. Since Good B has a higher marginal utility per dollar, purchasing more of Good B will increase total utility. After purchasing, you should compare again to see if the marginal utilities per dollar have equalized.

4. Purchase 1 more unit of Good B and stop.

   • Incorrect. While purchasing more of Good B is the right step, you should continue to compare the marginal utilities per dollar after each purchase to ensure they are equalized.

In summary, to maximize utility, you should purchase more of Good B and continue to compare the marginal utilities per dollar until they are equal.