Which of the following conditions must hold if a consumer is maximizing their utility? A) MU_X x P_X = MU_Y x P_Y B) MU_X = MU_Y C) MU_X/P_Y = MU_Y/P_X D) MU_X/P_X = MU_Y/P_Y

Question

Quizplus · Accepted Answer

This equation represents the condition of equalizing the marginal utility per dollar spent on both goods, which is necessary for the consumer to be maximizing their utility. Therefore, choice D is the correct answer. Choice A is close, but it includes unnecessary terms (the prices) and is not as concise as choice D. Choices B and C are incorrect as they do not take into account the relative prices of the goods.

Which of the Following Conditions Must Hold If a Consumer