Suppose that MU x /P x exceeds MU y /P y .To maximize utility,the consumer who is spending all her money income should buy:A) less of X only if its price rises.B) more of Y only if its price rises.C) more of Y and less of X.D) more of X and less of Y.

Question

Suppose that MU x /P x  exceeds MU y /P y .To maximize utility,the consumer who is spending all her money income should buy:A)  less of X only if its price rises.B)  more of Y only if its price rises.C)  more of Y and less of X.D)  more of X and less of Y.

Zybrea Knight · Accepted Answer

Final Answer : D, Explanation :  The notation suggests a comparison of marginal utilities per price unit (MUS/P) for goods X and Y. If the MUS/P of X exceeds that of Y, to maximize utility, the consumer should buy more of X and less of Y, as each additional dollar spent on X yields more utility than if the same were spent on Y.

Suppose that MU_x/P_x exceeds MU_y/P_y.To maximize utility,the consumer who is spending all her money income should buy:

A) less of X only if its price rises.
B) more of Y only if its price rises.
C) more of Y and less of X.
D) more of X and less of Y.

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Learning Objectives

Learning Objectives

Related questions

Suppose that MUx/Px exceeds MUy/Py.To maximize utility,the consumer who is spending all her money income should buy:A) less of X only if its price rises.B) more of Y only if its price rises.C) more of Y and less of X.D) more of X and less of Y.

Definitions

Learning Objectives

Learning Objectives

Related questions

Suppose that MU_x/P_x exceeds MU_y/P_y.To maximize utility,the consumer who is spending all her money income should buy:

A) less of X only if its price rises.
B) more of Y only if its price rises.
C) more of Y and less of X.
D) more of X and less of Y.