If MUx/Px exceeds MUy/Py, then a household can increase its utility by spending more on X and less on Y.

Question

Quizplus · Accepted Answer

When MUx/Px exceeds MUy/Py, it means that the marginal utility per dollar is higher for good X than for good Y. Therefore, a household can increase its overall utility by purchasing more of good X and less of good Y, as each dollar spent on good X will provide more marginal utility than each dollar spent on good Y.

If MUx/Px Exceeds MUy/Py, Then a Household Can Increase Its