Let the price of some good X exceed the price of a second good Y.In consumer equilibrium, it must be true that
A)total utility derived from both X and Y has begun to decline.
B)the marginal utility of X exceeds the marginal utility of Y.
C)the marginal utility of X equals the marginal utility of Y.
D)the marginal utility of Y exceeds the marginal utility of X.
E)any of the above could be, depending upon economic circumstance.

Question

Quizplus · Accepted Answer

In consumer equilibrium, the ratio of the marginal utility to price should be equal for all goods. If the price of X exceeds Y, then the marginal utility of X must also exceed that of Y to maintain equilibrium.

Let the Price of Some Good X Exceed the Price