Suppose the marginal utility for the last pencil you buy is 36 and each costs $1, whereas the marginal utility of the last pad of paper you buy is 300 and costs $2. are you maximizing utility? no. you need to buy more paper and fewer pencils. yes. no. you need to buy more pencils and less paper. no. you need to buy less paper and fewer pencils.

The answer is the first choice - no. you need to buy more paper and fewer pencils.

Marginal utility is the change in total satisfaction derived from consuming one more unit of a good. In this case, the pad of paper has higher marginal utility, thus in order to maximize it, you'll need to buy more paper and fewer pencils.

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