Suppose that MUx/Px exceeds MUy/Py.To maximize utility, the consumer who is spending all her money income should buy
A)less of X only if its price rises.
B)more of Y only if its price rises.
C)more of Y and/or less of X.
D)more of X and/or less of Y.

Question

Quizplus · Accepted Answer

To maximize utility, the consumer should allocate more resources to the good with the higher marginal utility per dollar spent, which is X in this case, and less to Y.

Suppose That MUx/Px Exceeds MUy/Py