Joanna is deciding between consuming Good X and Good Y.At her current level of consumption,her marginal utility per dollar for Good X is greater than the marginal utility per dollar for Good Y.To achieve the consumer optimum,Joanna needs to
A) consume more of Good Y until the marginal utility per dollar for Good Y is greater than the marginal utility for Good X.
B) consume more of Good X until the marginal utility per dollar for Good Y is greater than the marginal utility for Good X.
C) consume more of both Good X and Good Y until the marginal utility per dollar for Good Y is greater than the marginal utility for Good X.
D) consume more of Good X or less of Good Y until the marginal utility per dollar for Good X and Good Y is equal.
E) continue at her current level of consumption.

Question

Quizplus · Accepted Answer

The consumer optimum is achieved when the marginal utility per dollar for each good is equal. Since Joanna's marginal utility per dollar for Good X is currently greater than that of Good Y, the best choice is to consume less of Good Y (which will decrease its marginal utility per dollar) and/or consume more of Good X (which will increase its marginal utility per dollar) until the marginal utility per dollar for both goods is equal. Choice D is therefore the best option.

Joanna Is Deciding Between Consuming Good X and Good Y