Initially,a consumer is at an optimum.Then the price of X decreases.Consequently, A) $MU _ { X }$ / $\mathrm { P } _ { \mathrm { X } }$ $MU _ { Y }$ / $P _ { Y }$ . C) $MU _ { X }$ / $$\mathrm { P } _ { \mathrm { X } }$$ = $MU _ { Y }$ / $P _ { Y }$ . D) $MU _ { X }$ $MU _ { Y }$ .

Question

Initially,a consumer is at an optimum.Then the price of X decreases.Consequently,
A) $MU _ { X }$ /
$\mathrm { P } _ { \mathrm { X } }$ <
$MU _ { Y }$ /
$P _ { Y }$ .
B) $MU _ { X }$ /
$\mathrm { P } _ { \mathrm { X } }$ >
$MU _ { Y }$ /
$P _ { Y }$ .
C) $MU _ { X }$ /
$$\mathrm { P } _ { \mathrm { X } }$$ =
$MU _ { Y }$ /
$P _ { Y }$ .
D) $MU _ { X }$ >
$MU _ { Y }$ .

Quizplus · Accepted Answer

When the price of X decreases, the marginal utility per dollar spent on X ($MU_X/P_X$) becomes greater than that of Y, disrupting the initial consumer equilibrium.

Initially,a Consumer Is at an Optimum MUXMU _ { X }MUX​

Initially,a Consumer Is at an Optimum $MU _ { X }$