Assume that the marginal utility from good x is 10 units and the price of good x is $5 per unit....
Question:
Assume that the marginal utility from good x is 10 units and the price of good x is $5 per unit. The marginal utility from good y is 15 units and its unit price is $7. In this situation, a utility-maximizing consumer should:
a. consume more of good x.
b. consume only good y.
c. consume more of good y.
d. consume neither x nor y.
Utility
Utility is a term in consumer theory used to describe the satisfaction/benefit consumers obtain from consuming goods and services. The maximizing utility rule for a consumer is that the marginal utility per dollar spent on one good is equal to the marginal utility per dollar spent on the other good.
Answer and Explanation: 1
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The answer is C: consume more of good y
A utility-maximizing consumer should allocate spending so that the marginal utility per last dollar spent...
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Utility Theory: Definition, Examples & Economics
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