When the marginal utility per dollar of good x exceeds the marginal utility per dollar of good y,
A) the consumer should consume more of good x.
B) the consumer is consuming too much of good x.
C) good y must have a negative marginal utility.
D) the consumer is in an optimal situation if the price of good x exceeds the price of good y.

Question

Quizplus · Accepted Answer

When the marginal utility per dollar of good x exceeds the marginal utility per dollar of good y, the consumer should consume more of good x. This is because the consumer is getting more satisfaction per dollar from good x than from good y, so allocating more of their budget towards good x would increase their overall satisfaction.

When the Marginal Utility Per Dollar of Good X Exceeds