Assume that a consumer purchases a combination of products Y and Z and that the MU y/ Pᵧ = 22 and MU z/ P_z = 25. To maximize utility, without spending more money, the consumer should A)purchase less of Z and more of Y. B)purchase more of Z and less of Y. C)purchase more of both Y and Z. D)make no change in the quantities Y and Z.

Question

Quizplus · Accepted Answer

To maximize utility without spending more money, a consumer should allocate their budget in such a way that the marginal utility per dollar spent on each good is equal. Since MUz/Pz (25) is greater than MUy/Py (22), the consumer should purchase more of Z and less of Y to equalize the marginal utility per dollar spent on each.

Assume That a Consumer Purchases a Combination of Products Y