If a consumer purchases a combination of commodities x and y such that MU_x/P_x = 50 and MU_y/P_y = 40, to maximize utility, the consumers should buy. A) more of x and less of y. B) more of both x and y. C) less of x and more of y. D) less of both x and y.

Question

Quizplus · Accepted Answer

The ratio of marginal utility to price is higher for x (50) than y (40), indicating that the consumer gets more satisfaction per unit of money spent on x. Therefore, to maximize utility, the consumer should buy more of x and less of y.

If a Consumer Purchases a Combination of Commodities X and Y