For any two goods,X and Y,if MUX divided by PX equals 2.5 and MUY divided by PY equals 4.0,then with given income and prices the consumer should
A)buy more of good X and less of good Y.
B)buy more of good Y and less of good X.
C)buy all of good Y and no X.
D)stop because an equilibrium is achieved.

Question

Quizplus · Accepted Answer

The marginal utility per peso of Y is greater than that of X (4.0 > 2.5). Assuming that the consumer has a limited income, they would want to spend more on the good that provides the most marginal utility per peso. Therefore, the consumer would buy more of good Y and less of good X.

For Any Two Goods,X and Y,if MUX Divided by PX