Suppose that MUx/P_xexceeds MUy/P_y. To maximize utility, the consumer who is spending all her money income should buy A) less of X only if its price rises. B) more of Y only if its price rises. C) more of Y and/or less of X. D) more of X and/or less of Y.

Question

Quizplus · Accepted Answer

If MUx/P_x exceeds MUy/P_y, then it is optimal for the consumer to buy more of X (to increase their utility), or less of Y (to reduce the relatively lower utility gained from purchasing Y). Therefore, the best choice(s) would be to buy more of X and/or less of Y, which is reflected in option D.

Suppose That MUx/Px exceeds MUy/Py

Suppose That MUx/P_xexceeds MUy/P_y