Use the following to answer questions:
-(Table: Consumer Equilibrium) Look at the table Consumer Equilibrium. Assume that goods X and Y both cost $1 per unit and you have $7 to spend on both goods. To maximize utility, you would consume _____ units of X and _____ units of Y.
A) 2; 5
B) 3; 4
C) 4; 3
D) 5; 2

Question

Use the following to answer questions: 
-(Table: Consumer Equilibrium) Look at the table Consumer Equilibrium. Assume that goods X and Y both cost $1 per unit and you have $7 to spend on both goods. To maximize utility, you would consume _____ units of X and _____ units of Y.
A) 2; 5 
B) 3; 4 
C) 4; 3 
D) 5; 2

Quizplus · Accepted Answer

To maximize utility, the consumer should allocate their budget such that the marginal utility per dollar spent on each good is equal. Given the budget of $7 and the price of $1 per unit for both goods, consuming 4 units of X and 3 units of Y will likely equalize the marginal utility per dollar spent, maximizing total utility.

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