Given that MU_X/P_X

Question

Given that MU_X/P_X < MU_Y/P_Y, consumers who spend all their income on these two goods A)can never maximize total utility. B)have maximized total utility. C)can increase total utility by buying more of X and less of Y. D)can increase total utility by buying more of Y and less of X. E)a and b

Quizplus · Accepted Answer

The given inequality suggests that the marginal utility per dollar spent on X is less than the marginal utility per dollar spent on Y. Therefore, consumers can increase their total utility by buying more of Y and less of X, as this will allocate their spending towards the good that provides more utility per dollar spent.

Given That MUX/PX < MUY/PY, Consumers Who Spend All Their

Given That MU_X/P_X < MU_Y/P_Y, Consumers Who Spend All Their