Julia consumes two goods X and Y. Her current consumption pattern is such that, while she is operating on her budget constraint, her marginal utility per dollar of X is greater than that per dollar of Y. Which of the following statements is true?
A) In order to maximize her utility, Julia should consume less X and more Y.
B) Julia is operating at a point on her budget constraint that lies below and to the right (to the south-east) of the point of tangency between her budget constraint and the highest possible indifference curve.
C) Julia is operating at a point on her budget constraint that lies above and to the left (to the north-west) of the point of tangency between her budget constraint and the highest possible indifference curve.
D) Julia is operating at a point where her budget constraint is tangent to the highest possible indifference curve.
Correct Answer:
Verified
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