Maximizing Consumer Utility Under a Budget Constraint
Let M(U)a = z = 10 - x and M(U)b = z = 21 - 2y, where z is marginal utility per dollar measured in utils, x is the amount spent on product A, and y is the amount spent on product B.
Assume that the consumer has $10 to spend on A and B -- that is, x + y = 10.
How is the $10 best allocated between A and B?
How much utility will the marginal dollar yield?