The below figure shows the various combinations of the goods X and Y that yield different levels of utility.Figure 7.3

-If cherries cost twice as much as dates, and the last cherry consumed provides twice as much utility as the last date consumed, the consumer is maximizing utility.

Question

The below figure shows the various combinations of the goods X and Y that yield different levels of utility.Figure 7.3
 
-If cherries cost twice as much as dates, and the last cherry consumed provides twice as much utility as the last date consumed, the consumer is maximizing utility.

Quizplus · Accepted Answer

This is an example of the law of equi-marginal utility, where the consumer will continue to consume goods until the marginal utility per dollar spent is equal for both goods. In this scenario, if cherries are twice as expensive but provide double the utility, the consumer would consume fewer cherries but still reach the point where the marginal utility per dollar spent is the same for both goods. Therefore, the consumer is maximizing utility.

The Below Figure Shows the Various Combinations of the Goods