A utility-maximizing consumer buys so as to make ________ for all pairs of goods.
A) Px(MUx) = Py(MUv)
B) TUx/Px = TUy/Py
C) MUx/MUy = Px/Py
D) MUx = MUy

Question

Quizplus · Accepted Answer

The correct answer is that a utility-maximizing consumer buys goods in such a way that the marginal utility per dollar spent on one good equals the marginal utility per dollar spent on another good, which is represented by the equation MUx/MUy = Px/Py. This condition ensures that the consumer is allocating their budget in the most efficient way possible to maximize their overall utility.

A Utility-Maximizing Consumer Buys So as to Make ________ for All