FIGURE 6- 2
-Refer to Figure 6- 2. Suppose the price of X is $2, the price of Y is $1, and the consumer's income is
$10. The consumer is currently buying 4 units of good X and 2 units of good Y. In order to maximize his utility, he should
A) buy the same amount of X but less Y.
B) buy more of X and less Y.
C) buy more of X but the same amount Y.
D) buy less of X and more Y.
E) make no changes -- he is already maximizing his total utility.

Question

FIGURE 6- 2
-Refer to Figure 6- 2. Suppose the price of X is $2, the price of Y is $1, and the consumer's income is
$10. The consumer is currently buying 4 units of good X and 2 units of good Y. In order to maximize his utility, he should
A) buy the same amount of X but less Y. 
B) buy more of X and less Y. 
C) buy more of X but the same amount Y. 
D) buy less of X and more Y. 
E) make no changes -- he is already maximizing his total utility.

Quizplus · Accepted Answer

The consumer should adjust their consumption to equalize the marginal utility per dollar spent on each good. If the marginal utility per dollar spent on Y is higher than that on X, the consumer should buy less X and more Y to maximize utility.

FIGURE 6- 2 -Refer to Figure 6- 2. Suppose the Price of X