Asked by Brianna Sparks on Jun 10, 2024
Verified
Tyrell is consuming X and Y so that he is spending his entire income and MUx/Px = 7 and MUy/Py = 7. To maximize utility, he should consume
A) the same amount of X and Y since he is already maximizing utility.
B) less of both X and Y.
C) more X and less Y.
D) less X and more Y.
Utility
A concept in economics that refers to the total satisfaction received from consuming a good or service.
X and Y
Often used in economic models to represent variables, products, or factors that can influence outcomes in analyses.
Consuming
The act of using up goods and services to satisfy wants or needs.
- Implement the utility maximization concept to assess choices made by consumers among different goods.
Verified Answer
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Final Answer :
A
Explanation :
Tyrell is maximizing his utility because the marginal utility per dollar spent on both goods X and Y is equal, which is consistent with the utility maximization condition.
Learning Objectives
- Implement the utility maximization concept to assess choices made by consumers among different goods.