When Kathryn is at her consumer equilibrium, she is
A)consuming the combination of goods that is at the midpoint of her budget line.
B)consuming a combination of goods that is located inside her budget line.
C)consuming a combination of goods that is located outside her budget line.
D)consuming a combination such that the marginal utility from good X divided by the marginal utility from good Y equals the price of good X divided by the price of good Y.
E)on the midpoint of her demand curve.

Question

Quizplus · Accepted Answer

At consumer equilibrium, the consumer maximizes total utility subject to their budget constraint. This means that the consumer chooses a combination of goods such that the marginal utility per dollar spent on each good is equal. This can be expressed as (MUx/Px) = (MUy/Py), which is option D.

When Kathryn Is at Her Consumer Equilibrium, She Is