When there is a difference between the MUₓ/Pₓ and the MUᵧ/Pᵧ, we expect that a consumer will:
A) continue to purchase the quantities generating this outcome.
B) buy more of good x.
C) buy more of good y.
D) change the quantities of good x and y in their current purchase basket.

Question

Quizplus · Accepted Answer

When there is a difference between MUₓ/Pₓ and MUᵧ/Pᵧ, the consumer's utility can be maximized by adjusting the quantities of goods x and y in their current purchase basket. Therefore, the consumer would change the quantities of good x and y in their current purchase basket to maximize their total utility. This can be achieved by increasing the consumption of the good with higher MU/price ratio and decreasing the consumption of the good with lower MU/price ratio until the ratio becomes equal.

When There Is a Difference Between the MUₓ/Pₓ and the MUᵧ/Pᵧ