Use the following for questions 61-69.

-(Exhibit: Consumer Equilibrium 1) Assume that the price of both goods is $1 per unit, and you consume 4 units of good X and 2 units of good Y.To maximize utility, assuming that the goods are divisible, you would consume:
A) less of X and more of Y.
B) more of both X and Y.
C) less of both X and Y.
D) more of X and less of Y.

Question

Use the following for questions 61-69.
  
-(Exhibit: Consumer Equilibrium 1) Assume that the price of both goods is $1 per unit, and you consume 4 units of good X and 2 units of good Y.To maximize utility, assuming that the goods are divisible, you would consume:
A) less of X and more of Y. 
B) more of both X and Y. 
C) less of both X and Y. 
D) more of X and less of Y.

Quizplus · Accepted Answer

To maximize utility, the consumer should adjust their consumption to equalize the marginal utility per dollar spent on each good. If the consumer is currently consuming 4 units of X and 2 units of Y at the same price, and this is not the utility-maximizing combination, it implies that the marginal utility per dollar of one good is higher than the other. Without specific marginal utility values, the general principle suggests adjusting consumption towards the good with higher marginal utility per dollar, which means consuming less of X and more of Y if we assume that's the direction needed to equalize the marginal utility per dollar.

Use the Following for Questions 61-69