Ellie is spending her entire income on goods X and Y. Her marginal utility from the last unit of X is 100 and the marginal utility from the last unit of Y that she consumes is 50. Ellie's utility is only maximized if

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Ellie's utility is maximized when the marginal utility per dollar spent on each good is equal. Since the marginal utility from the last unit of X is twice that of Y, for her to maximize utility, the price of X must be twice that of Y to equalize the marginal utility per dollar spent on both goods.

Ellie Is Spending Her Entire Income on Goods X and Y