The below table shows the average utility (in utils) obtained from the consumption of goods A and B.Table 7.3 -If MU_x / P_x = MU_Y / P_Y, then _____. A)the consumer should purchase the same quantity of X and Y B)the consumer should purchase less of X C)the consumer is maximizing utility D)the consumer should purchase more of Y E)the consumer is minimizing utility

Question

Quizplus · Accepted Answer

The equation MU_x / P_x = MU_Y / P_Y is known as the marginal rate of substitution. When the equation is satisfied, the consumer is in equilibrium and is maximizing overall utility. Therefore, the correct answer is C, the consumer is maximizing utility.

The Below Table Shows the Average Utility (In Utils) Obtained