Exhibit 6-3 Marginal utility data for goods X and Y $$\begin{array} { | c | c | c | c | }
\hline \text { Units of good X } & \begin{array} { c }
\text { Marginal utility of } \
\text { good X }
\end{array} & \text { Units of good Y } & \begin{array} { c }
\text { Marginal utility of } \
\operatorname { good~Y }
\end{array} \
\hline 1 & 20 & 1 & 14 \
2 & 16 & 2 & 12 \
3 & 12 & 3 & 10 \
4 & 8 & 4 & 8 \
5 & 4 & 5 & 6 \
\hline
\end{array}$$
-As shown in Exhibit 6-3, assume that the price of good X is $2 per unit and the price of good Y is $1 per unit and your budget is $11. If you consume 3 units of good X and 4 units of good Y and maximize utility, you should consume:
A) neither X nor Y.
B) more of X.
C) more of Y.
D) more of both X and Y.
E) less of both X and Y.

Question

Exhibit 6-3 Marginal utility data for goods X and Y $$\begin{array} { | c | c | c | c | } 
\hline \text { Units of good X } & \begin{array} { c } 
\text { Marginal utility of } \
\text { good X }
\end{array} & \text { Units of good Y } & \begin{array} { c } 
\text { Marginal utility of } \
\operatorname { good~Y }
\end{array} \
\hline 1 & 20 & 1 & 14 \
2 & 16 & 2 & 12 \
3 & 12 & 3 & 10 \
4 & 8 & 4 & 8 \
5 & 4 & 5 & 6 \
\hline
\end{array}$$
-As shown in Exhibit 6-3, assume that the price of good X is $2 per unit and the price of good Y is $1 per unit and your budget is $11. If you consume 3 units of good X and 4 units of good Y and maximize utility, you should consume:
A) neither X nor Y.
B) more of X.
C) more of Y.
D) more of both X and Y.
E) less of both X and Y.

Quizplus · Accepted Answer

The marginal utility per dollar spent on good Y (10/1 = 10) is greater than the marginal utility per dollar spent on good X (12/2 = 6). Therefore, you should consume more of good Y.

Exhibit 6-3 Marginal Utility Data for Goods X and Y