Use the following to answer questions:
-(Table: Consumer Equilibrium) Look at the table Consumer Equilibrium. Assume that the price of good X is $2 per unit and the price of good Y is $1 per unit, that you consume three units of good X and three units of good Y, and that you are spending all of your income. To maximize utility, assuming that the goods are divisible, you would consume _____ of X and _____ of Y.
A) less; less
B) more; more
C) less; more
D) more; less

Question

Use the following to answer questions: 
-(Table: Consumer Equilibrium) Look at the table Consumer Equilibrium. Assume that the price of good X is $2 per unit and the price of good Y is $1 per unit, that you consume three units of good X and three units of good Y, and that you are spending all of your income. To maximize utility, assuming that the goods are divisible, you would consume _____ of X and _____ of Y.
A) less; less 
B) more; more 
C) less; more 
D) more; less

Quizplus · Accepted Answer

To maximize utility, the consumer should equalize the marginal utility per dollar spent on each good. If the marginal utility per dollar of good Y is higher than that of good X, the consumer should consume less of X and more of Y.

Use the Following to Answer Questions