If a consumer wishes to maximize satisfaction given limited income and MU_x/P_x A) buy less of both X and Y. B) buy more of X and less of Y. C) buy more of Y and less of X. D) buy more of both X and Y.

Question

Quizplus · Accepted Answer

To maximize satisfaction, the consumer should equalize the marginal utility per dollar spent across goods. If MUx/Px is less than the marginal utility per dollar of Y, the consumer should buy more of Y and less of X.

If a Consumer Wishes to Maximize Satisfaction Given Limited Income