Asked by Mobolaji Ajewole on Jun 30, 2024
Verified
If MUx/Px > MUy/Py, then
A) spending a dollar less on Y and a dollar more on X increases utility.
B) spending a dollar less on X and a dollar more on Y increases utility.
C) X is more expensive than Y.
D) Y is more expensive than X.
Utility
Refers to the satisfaction or benefit that consumers receive from consuming goods or services.
Spending
The act of using money to purchase goods or services.
Dollar
The official currency of several countries, including the United States, and a standard unit of currency in international markets.
- Invoke the principle of maximizing utility to study how consumers choose among a variety of goods.
Verified Answer
ZK
Zybrea KnightJul 05, 2024
Final Answer :
A
Explanation :
The given inequality suggests that the marginal utility per dollar spent on X is greater than that for Y, implying that reallocating spending from Y to X increases overall utility.
Learning Objectives
- Invoke the principle of maximizing utility to study how consumers choose among a variety of goods.