Use the following to answer the questions below:
z is the marginal utility per dollar, x is the amount spent on product A, and y is the amount spent on product B.
Assume MUA = z = 10 – x and MUB = z = 21 – 2y.
Assume that the consumer has $10 to spend on A and B; that is, x + y = 10.
(a) What is best way to allocate the expenditure of the $10?
(b) What is the marginal utility per dollar in the optimal allocation?