Assume that a consumer purchases a combination of products X and Y and the MU_x / P_x = 75 utils per dollar and MU_y / P_y = 50 utils per dollar.To maximize utility without spending more dollars,the consumer should buy: A)more of both X and Y. B)less of Y only if the price of Y increases. C)more of Y and less of X. D)more of X and less of Y. E)less of both X and Y.

Question

Quizplus · Accepted Answer

The consumer should spend more on product X since it generates more utils per dollar than product Y (75 > 50). Therefore, the consumer should buy more of X and less of Y to maximize utility without spending more dollars. Option D is the best choice as it suggests buying more of X (product X) and less of Y (product Y).

Assume That a Consumer Purchases a Combination of Products X