Assuming only two goods X and Y, if MU_X/P_X = MU_Y/P_Y, then A)the consumer is in equilibrium. B)the consumer cannot be made better off by redirecting his purchases. C)the consumer is deriving the same marginal utility per dollar spent on both goods. D)a and c E)a, b and c

Question

Quizplus · Accepted Answer

The equation represents the condition for consumer equilibrium in the context of utility maximization, where the marginal utility per dollar spent on both goods X and Y is equal. This implies that the consumer is in equilibrium (A), cannot be made better off by changing the allocation of spending (B), and is deriving the same marginal utility per dollar spent on both goods (C). Therefore, all statements A, B, and C are correct.

Assuming Only Two Goods X and Y, If MUX/PX =

Assuming Only Two Goods X and Y, If MU_X/P_X =