Given two goods, X and Y, and their prices, P_X and P_Y a consumer will maximize total utility by allocating expenditures such that A)MU_X/P_Y = MU_Y/P_X. B)P_Y/MU_X = P_X/MU_Y. C)MU_X/P_X = MU_Y /P_Y. D)MU_X = P_X = MU_Y = P_Y = MU_$. E)MU_X = MU_Y = P_X = P_Y = MU_$.

Question

Quizplus · Accepted Answer

The consumer maximizes total utility by equating the marginal utility per dollar spent on each good, which is represented by the equation in choice C.

Given Two Goods, X and Y, and Their Prices, PX

Given Two Goods, X and Y, and Their Prices, P_X