If Px = Py, then when the consumer maximizes utility,
A) X must equal Y.
B) MU(X) must equal MU(Y).
C) MU(X) may equal MU(Y), but it is not necessarily so.
D) X and Y must be substitutes.

Question

Quizplus · Accepted Answer

When a consumer maximizes utility given a budget constraint, the marginal utility per dollar spent on each good must be equal. This is represented by the condition MU(X)/Px = MU(Y)/Py. If Px = Py, then for utility maximization, MU(X) must equal MU(Y).

If Px = Py, Then When the Consumer Maximizes Utility