A utilitymaximizing consumer who is considering two goods, x and y,would allocate her budget in such a way that A)MUx = MUy B)MUx MUy C)MUx/Px MUy/Py D)MUx/Px = MUy/Py E)MUx/Px

Question

A utility­maximizing consumer who is considering two goods, x and y,would allocate her budget in such a way that
A)MUx = MUy
B)MUx > MUy
C)MUx/Px > MUy/Py
D)MUx/Px = MUy/Py
E)MUx/Px < MUy/Py

Quizplus · Accepted Answer

The consumer would allocate her budget in such a way that the marginal utility per dollar spent on each good is equal. Therefore, MUx/Px = MUy/Py. This ensures that the consumer is maximizing her utility given her budget constraint.

A Utility­maximizing Consumer Who Is Considering Two Goods, X and Y,would

A Utilitymaximizing Consumer Who Is Considering Two Goods, X and Y,would