If the MU\P ratio for good X is less than the MU\P ratio for good Y, this means that
A)an individual is receiving more utility per dollar from good Y than good X.
B)the price of good X is lower than the price of good Y.
C)the price of good Y is lower than the price of good X.
D)the MU of good X is lower than the MU of good Y.

Question

Quizplus · Accepted Answer

The MU\P ratio indicates how much extra utility an individual can get from spending an additional dollar on a good. If the MU\P ratio for good Y is higher than the MU\P ratio for good X, this means that each additional dollar spent on good Y will provide more utility than each additional dollar spent on good X. Therefore, an individual is receiving more utility per dollar from good Y than good X.

If the MU\P Ratio for Good X Is Less Than