You're maximizing utility when: A) (MU of X)/ (P of X) (MU of Y)/ (P of Y). B) (MU of X)/(P of X)

Name: You're maximizing utility when: A) (MU of X)/ (P of X) > (MU of Y)/ (P of Y). B) (MU of X)/(P of X) < (MU of Y)/(P of Y). C) (MU of X)/(P of X) = (MU of Y)/(P of Y). D) (MU of X)/(P of Y) = (MU of Y)/(P of X).
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Question

You're maximizing utility when:
A) (MU of X)/ (P of X) > (MU of Y)/ (P of Y).
B) (MU of X)/(P of X) < (MU of Y)/(P of Y).
C) (MU of X)/(P of X) = (MU of Y)/(P of Y).
D) (MU of X)/(P of Y) = (MU of Y)/(P of X).

Quizplus · Accepted Answer

Utility is maximized when the marginal utility per dollar spent is equal across all goods, which is represented by (MU of X)/(P of X) = (MU of Y)/(P of Y).

You're Maximizing Utility When