The price of good X is $5 and the price of good Y is $15. If the marginal utility of good X is 20 then the marginal utility of good Y must be ________ to have an optimum combination of goods purchased.
A) 4
B) 20
C) 60
D) 80

Question

Quizplus · Accepted Answer

To have an optimum combination of goods purchased, the consumer should equate the marginal utility per dollar spent on each good. Since the price of good X is $5 and its marginal utility is 20, the marginal utility per dollar spent on X is 20/5 = 4. For good Y, priced at $15, to have the same marginal utility per dollar, its total marginal utility must be 15 * 4 = 60.

The Price of Good X Is $5 and the Price