Suppose a consumer knows that at her current bundle, MUx/Px MUy/Py. Is this individual choosing a bundle that maximizes utility?
A)Yes, because this individual values good X more than good Y.
B)Yes, because this individual values good Y more than good X.
C)No. This individual should shift consumption from good X to good Y.
D)No. This individual should shift consumption from good Y to good X.

Question

Suppose a consumer knows that at her current bundle, MUx/Px > MUy/Py. Is this individual choosing a bundle that maximizes utility? ​
A)​Yes, because this individual values good X more than good Y.
B)​Yes, because this individual values good Y more than good X.
C)​No. This individual should shift consumption from good X to good Y.
D)​No. This individual should shift consumption from good Y to good X.

Quizplus · Accepted Answer

The consumer should consume more of good X and less of good Y to equalize the marginal utility per dollar spent, thereby maximizing utility.

Suppose a Consumer Knows That at Her Current Bundle, MUx/Px