A consumer maximizes satisfaction at the point where his subjective valuation of good X measured as the amount of good Y he or she is willing to give up to obtain an additional unit of X
Equals
A)one over the slope of the indifference curve through that point.
B) Py / Px.
C) Px/Py.
D) Y/Px.
E)the slope of the indifference curve through that point.

Question

Quizplus · Accepted Answer

The consumer maximizes satisfaction at the point where the marginal utility per dollar spent on each good is equal. This is represented by the ratio of the prices of the two goods, Px/Py. Therefore, the subjective valuation of good X measured as the amount of good Y he or she is willing to give up to obtain an additional unit of X is Px/Py.

A Consumer Maximizes Satisfaction at the Point Where His Subjective