Use the following to answer questions :
-(Table: Consumer Equilibrium)Use Table: Consumer Equilibrium.Assume that the price of good X is $1 per unit and the price of good Y is $2 per unit,that you consume four units of good X and two units of good Y,and that you are spending all of your income.To maximize utility,assuming that the goods are divisible,you would consume _____ of X and _____ of Y.
A) less;less
B) more;more
C) less;more
D) more;less

Question

Use the following to answer questions : 
-(Table: Consumer Equilibrium)Use Table: Consumer Equilibrium.Assume that the price of good X is $1 per unit and the price of good Y is $2 per unit,that you consume four units of good X and two units of good Y,and that you are spending all of your income.To maximize utility,assuming that the goods are divisible,you would consume _____ of X and _____ of Y.
A) less;less 
B) more;more 
C) less;more 
D) more;less

Quizplus · Accepted Answer

To maximize utility, the consumer should allocate their entire budget such that the ratio of marginal utilities to prices for both goods is equal. From the given table, the marginal utility per dollar for good X is 10 while that for good Y is 5. Therefore, the consumer should consume more of good X and less of good Y, which is option D.

Use the Following to Answer Questions